Report No. 8657-C:HA China Provincial Education Planning and Finance-Sector Study (In Two Voirmes) Volume I: M Main Repori June 26, 1991 Environnment, luman Resources andi Urban Developmnent Operations Division China and Mongolia DeŽpartrnen Asid Rogion FOR OFFICIAL USE ONLY Doc'unent of the World Batqk This docuiment hias a restricted distruikion'snd' may hie used by recipienits -~orYy in the petformarnce Qf their off icia,' dutties. Its contents may niot otherwise hediscIosed witnouit World Rani< a, thorization. CURRENCY EqUIVALENT The Chinese currency is called Renminbi (RMB) It is denominated in Yuan (Y) Exchange Rates used in this report are: 1980: US$1 = Y 1.50 1981: US$1 - Y 1.71 1982: US$1 = Y 1.88 1983: US$1 - Y 2.00 1984: US$1 - Y 2.00 1985: US$1 = Y 2.80 1986: US$1 - Y 3.20 1987: US$1 = Y 3.70 1988: US$1 = Y 3.70 1989: US$1 - Y 3.70 1990: US$1 = Y 4.70 FISCAL YEAR January 1 - December 31 ACADEMIC YEAR September 1 - August 31 ABBREVIATIONS AND ACRONYMS CIER 8 Central Institute of Education Research CTMRI Curriculum and Teaching Materials Research Institute IDA = International Development Association MOF = Ministry of Finance MOLP Ministry of Labor and Personnel NECPSST = National Evaluation Committee for Primary and Secondary School Textbooks PEP People's Education Press SEdC - State Education Commission SPC - State Planning Commission STS = Secondary Vocational Schools SWS = Skill Worker Schools SVS Secondary Vocational Schools TVE 3 Television Education - FOR OMFICIAL USE ONLY CHINA PROVINCIAL EDUCATION PLANNING AND FINANCE Table of Contents Page No. EXECUTIVE SUMtMARY .... . . . . . . . . . . . . . . . . . . . . viii I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . 1 Scope of the Report . . . . . . . . . . . . . . . . . . . . 2 Route Map of the Report . . . . . . . . . . . . . . .. 4 II. NATIONAL CONTEXT FOR EDUCATION REFORM . . . . . . . . . . . 6 The Economic Reform Process . . . . . . . . . . . . . . . . 6 Education Policy Refonm . . . . . . . . . . . . . . . 11 Government Plans for the 1990's . . . . . . . . . . . . . . 14 III. STRUCTURE, MANAGEMENT, PLANNING AND FINANCING OF EDUCATION IN CHINA .... . . . . . . . . . . .... . 17 Coverage . . . . . . . . . . . . . . . . . . . . . . . . . 18 Structure . . . . . . . . . . . . . . . . . . . . . 20 Management .... . . . . . . . . . . . . . . .... ..... 36 Planning *......... . . . . . . . . . . . . . . .. 48 The Costs and Financing of Education . . . . . . . . 51 Summnary of Recommendations ... . . . . . . . . . . . . . 61 IV. EDUCATION FINANCING AT THE PROVINCIAL LEVEL . . . . . . . . 62 Current Financial Sources for Primary and Secondary Education ... . ............... . 63 Utilization of Education Resources . . . . . . . . . . . . 71 Underfinancing and Resource Mobilization . . . . . . . . . 82 Inequalities in Education Financing . . . . . . . . . . . . 86 Reconmendations . . . . . . . . . . . . . . . . . . . . . . 90 V. PLANNING OF UNIVERSAL BASIC EDUCATION IN GUIZHOU AND SHAANXI PROVINCES . . . . . . . . . . . . . . . ........... 93 Education Planning .... . . . . . .............. ... 94 Results of the Guizhou Plan .. .. .. . . . ......... . 99 Results of the ShaanSi Plan .......... ............ .... 100 Government Cost Estimates for the Development of Education to the Year 2000 . . . . . . . . . . . . . . . . . . . . 103 Selected Issues .... . . . . . . . . .................... 108 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . 111 This document has a restricted distribution and may be used by recipients only in the performace Of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - it - Page No. VI. HIGHER EDUCATION IN GUIZHOU AND SHAANXI PROVINCES . . . . . 112 National Context and Recent Development of Higher Education . . . . . . . . . . . . . . . . . . . . . . . . 113 Planning and Financing of Higher Education at the Provincial Level . ...................... . 123 Internal and Ezternal Efficiency Issues in Ghizhou and Shaanxit . . . . . . . ... . .... . .... . .... . .... . ..... 127 Ways to Improve Internal and External Efficiency . . . . . 130 Costs and Benefits of Institutional Mergers and Consolidation . . . . . . . . . . . . . . . . . . . . . . 134 Feasibility of Increasing Internal and External Efficiency of Higher Education . . . . . . . . . . . . . 135 Recommendations . . . . . . . . . . . . . . . . . . . 137 VII. SUMMARY OF MAIN ISSVES AND RWCOMMENDTIONS . . . . . . . . 138 This report was prepared on the basis of a mission that visited China in November/December 1989. The mission consisted of Himelda Martinez (Educator, task manager), Maureen Woodhall (economist, consultant), Min Weifang (educator, consultant), Cheng Rai Ming (educator, consultant) and Mun Tsang (economist, consultant). Ernesto Scheifelbein (economist, consultant) estimated repetition and drop-out rates. Christopher Dougherty (econ3mist, consultant) prepared a contribution on vocational education and manpower planning. Mr. He Jin and Ms. Michelle Detwiler provided assistance in Washington and Ms. Linda Nih assisted in the processing of the report. The vork of the mission was aided by close consultation and support by staff of the State Education Comission in Beijing, by the Institute of Higher Education in Beijing University and by the Bureaus of Education in Guihou and Shaanui. Ms. Xu Lin from SEdC accompanied the Mission in the visit to Shaanxi and provided valuable assistance. Page No. TABLES IN TEXT 1.1 Provincial Population and Annual Income Per Capita . . . . . . 3 1.2 Education Development Index, 1988 . . . . . . . . . . . . . . 5 2.1 Growth in Enrollment in Senior Secondary Schools by Types . . 13 3.1 Total Enrollment in 1988 . . . . . . . . . . . . . . . . . . 19 3.2 Enrollment Rates by Level in China, Asia Countries and World Regions, 1985 . . . . . . . . . .. .. . . . . . . . . . 19 3.3 Pre-School Educations Schools, Enrollments, Teacbers, l9S0-1988 . . . . . . . . . . . . . . . . . . '. . . . . . . . 20 3.4 Primary School Indicators . . . . . . . . . . . . . . . . . . 24 3.5 Primary Schools, Enrollments, Staff, Teachers, 1949-1988 . . 26 3.6 Repetition Rate of Primary Schools by Grade (Estimated) . . . 27 3.7 Repetition Rate of Primary Schools by Year (E4timated) . . . 27 3.8 Junior Secondary Schools, Enrollments, Teachers, 1949-1988 . 29 3.9 Primary-Junior Secondary Promotion Ratios . . . . . . . . . . 30 3.10 Promotion from Junior to Senior Secondary Education . . . . . 30 3.11 Number of Higher Education Institutlons, 1979-1985 . . . . . 32 3.12 Higher Education Institutions by Affiliation, 1988 . . . . . 33 3.13 Education Attainment of Adults in China, Asian Countries and World Regions in the 1980's . . . . . . . . . . . . . . . 33 3.14 Literacy Classes, Enrollments, Teachers, 1980-1987 . . . . . 34 3.15 Illiteracy Rates, by Sex, Location and Minority (1982 Census) 35 3.16 Illiteracy Rates, by Sex and Age Groups (1982 Census) . . . . 35 3.16a Teachers' Workload (Personal Weekly Records) - Average Hours Per Week . . . . . . . . . . . . . . . . . . . . . . . . . . 40 3.16b Teacher's Workload by Level - Average Hours Per Week . . . . 41 3.17 Normal Schools, Enrollments, Teachers, 1949-1987 . . . . . . 42 3.18 In-Service Teacher Training (Primary & Secondary), 1980-1987 43 3.19 Expenditures on Education, 1950-1985 . . . . . . . . . . . . 53 3.20 Education Expenditures of China . . . . . . . . . . . . . . . 54 3.21 Unit Costs of Public Education in China and Other Asian Countries - Mid 1980 . ............ ...... . 55 3.22 Unit Costs of Education in China . . . . . . . . . . . . . . 56 3.23 Budgeted Recurrent Education Expenditures by Types of Schools . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 3.24 Unit Costs of Vocational Education in China, 1988 (Including Agricultural Education) . . . . . . . . . . . . . . . ... 58 3.25 Average Income of Gongban and Minban Teachers in China, 1985 59 3.26 Fees for Public Education as X of Unit Operating Costs . . . 60 4.1 School Fees and Other Direct Private Costs of Primary and Secondary Education in Shaanxi and Ouizhou Provinces, 1988 . 68 4.2 Budgeted and Non-Budget Funds for Primary and Secondary Education in Shaanxi and Guizhou Provinces, 1988 . . . . . . 69 4.3 Recurrent and Capital Expenditures on Primary and General Secondary Education in Shaanzi Province, 1988 . . . . . . . . 72 4.4 Recurrent and Capital Expenditures on Primary and General Secondary Education in Guizhou Province, 1988 . . . . 73 - iv - Page No. 4.5 Per Student *Common' Education Expenditures in Shaanxi and Guizhou Provinces as Compared to National Minimum Standards, 1988 . . . . . . .. . . . . . . . . . . . 74 4.6 Recurrent Education Expenditures on Primary and General Secondarl Education in Shaanxi and Guizhou Provinces, 1980-1988 . . . . . . . . . . . . . . . . . . . . . . . . . . * S 4.7 Number of Education Personnel in Shaanxi and Guizhou Province, 1984 and 1988 . . . . . . . . . . . . . . . . . . . 77 4.8 Education Expenditures by Subsectors in Shaanxi and Guizhou Provinces, 1987 . . . . . . . . . . . . . . . . . . . . . . . 78 4.9 Per-Student Total Education Expenditure in Shaanxi and Guizhou Provinces, 1980-1988 . . . . . . . . . . . . . . . . 79 4.10 Costliness of Education in Shamnxi and Guizhou Provinces, 1987 . o. .... .... .... .... ................. . ........... ... 81 4.11 Unit Costs of Public Education in China and Selected Asian Countries .... . . . . . . . . . . * . . . * . . * *. 82 5.1 Projection of Primary School Teachers . . . . . . . . . . . . 97 5.2 Planning Norms of Non-personnel Expenditures in Primary Schools (Guizhou) . . . . . . . . 98 5.3 Planning Norms of Primary School Facilities (Guizhou) . . 98 5.4 Planning Goals for Primary School Facilities by 2000 . . . . 100 5.5 Norm of Class Size in Shaanxi Province . . . . . . . . . . . 101 5.6 Repetition Rates for Primary Classes (Shaanxi) . . . . . . . 101 5.7 Time-Table to Universalize Education in Shaanxi Province . 102 5.8 Shaanxi Province - Cost Projections for Basic Education, 1989-2000 . . . . . . . . . . . . *..*. . . . *.. . 104 5.9 Future Education Expenditure of Shaanxi Province . . . . . . 105 6.1 Unit Costs and GNP per capita, 1952-1988 . . . . . . .. . . . 118 6.2 Higher Education Student-Teacher Ratio, 1952-1988 . . . . . . 120 6.3 Number of Higher Education Institutions by Type and Size (Average Enrollment) in China, 1988 . . . . . . . . . . 121 6.4 Number of Higher Education Institutions by Type and Size (Average Enrollment) in Shaanxi and Guizhou Provinces, 1988 . . . . . . . . . . . . . . . . . . . . . . . 125 Figures in text 2.1 Management by Levels . . . . . . . . . . . . . . . . . . . . 12 3.1 Structure of the Education System . . . . . . . . . . . . . . 21 3.2 Structure of the Formal Education System . . . . . . . . . 22 3.3 Primary School Indicators Used in China . . . . . . . . . . . 23 3.3 (Cont'd) Indicators Not Used in China . . . . . . . . . . . . 24 3.4 Administrative Structure . . . . . . . . . . . . . . . . . . 37 3.5 Responsibility of Education Bureaus . . . . . . . . . . . . . 38 3.6 Structure of Teacher Training . . . . . . . . . . . . . . . . 42 3.7 Primary Pupil/Teacher Ratio . . . . . . . . . . . . . . . . . 44 4.1 Resources for Education in Shaanxi and Guizhou Provinces . . 64 6.1 Chinese Higher Education - Increase of Enrollment, 1980-1988 114 6.2 Chinese Higher Education - Increase of Colleges, 1980-1988 . 114 - v . 6.3 Chinese Higher Education - Increase of College-Educated People Per 10,000 in Labor Force, 1980-1988 . . . . . . . . . 114 6.4 Chinese Higher Education - Increase of College Students Per 10,000 People in Population, 1980-1988 . . . . . . . . . . . 114 6.5 Recurrent Unit Cost/GNP per capita, 1952-1987 . . . . . . . . 119 6.6 Changes in Ratio of Unit Cost to GNP per capita, 1978-1987 . 119 6.7 Chinese Higher Education Student-Teacher Ratio, 1952-1988 . . 122 - Wi - ANNEXES Annexes to Chapter 1 Annex 1.1 Summary of Issues and Recommendations Found in Previous Sector Reports Annex 1.2 Provincial Education Statistics (Students Enrollment, Teachers and Schools) Annexes to Chapter 2 Annex 2.1 Compulsory Education Law Annexes to Chapter 3 Annex 3.1 and National Education Statistics Annex 3.2 Comparative Education Statistics Annex 3.3 Public Expenditures on Education Annex 3.4 Curriculum Annex 3.5 Vocational Training in China Annex 3.6 Recommended Programs, Policies and Studies Related to Skill Trainitg Annexes to ghapter 4 Annex 4.1 Statistics on Prefectures visited by the Mission Annex 4.2 Education Finances in Guizhou and Shaanzi Annex 4.3 Enrollment and Cost Projections in Guizhou and Shaanxi Annexes to Chapter 5 Annex 5.1 Parameters for Government Cost Estimstes Annex 5.2 Guishous Projection of Required Espenditure for Basic Education Annex to Chapter 6 Annex 6.1 Higher Education Statistics and Financlial Information Annex 6.2 Cost and Benefits of Higher Education Institutional Mergers -vii- PROVIsCIAL EDUCATION PLANNING AND FINANCE BASIC DATA ENROLuIENT 1979 1985 1988 1989 Formal School Enrollments Primary (Million) 146.6 133.7 125.4 123.7 Secondary Total (MLN) 60.3 50.9 53.5 50.5 (Secondary General (MLN) 59.1 47.1 47.6 45.5 (Secondary Vocational (MLN) 1.2 3.8 5.9 5.0 igbher Education (MLN) 1.02 1.70 2.07 i.08 Non Fonnal Earollment: Primary (MLN) 21.2 8.3 15.8 19.5 Secondary (MLN) 6.1 5.5 12.3 15.4 Sigher Education (MLN) 1.1 2.0 1.7 1.7 '"tal Formal and Non-Formal 236.9 202.1 210.87 212.9 Total Population (NLN) 975.4 1,050.4 1,096.1 1,111.9 Students as S of Total 24S 19? 192 19? BUDGET National Budget (bln yuan) 127.4 184.5 244.8 Gross National Product (bln yuan) 389 832 1,086 GNP/Capita (yuan) 399 793 980 Education Ezpenditure (bln yuan) 8.8 22.8 27.7 Education as I of GNP 2.3 2.7 2.6 Zducation as I of Nat. Budget 6.9 12.4 11.3 Shaanxi Enrollment 1988 1989 Primary (thousands) 3,409.7 3,511.0 Secondary tshousands) 1,730.8 1,481.0 Higher education (thousands) 98.0 98.6 Guizhou Enrollment Primary (thousands) 4,497.0 4,403.6 Secondary (thousands) 1,081.4 1,029.7 Higher education (thousands) 27.3 27.6 -viii- EXECUTIVE SUMMARY Introduction 1. Compared with other developing countries, China has been remarkably successful in establishing a formal school system. Primary schools are widely distributed across the nation and have been complemented by a comprehensive structure of non-formal education for adults. Teachers are diligent, students are eager to learn and the attainment of literacy and numeracy is almost universal. If economic gro.-th and demographic trends continue and adequate policies are put in place to finance schools in the poorest rural communities (through financial flows from higher levels of government), China should be able to achieve universalization of a nine year school system by the year 2010, provided unit costs are carefully controlled. 2. To further strengthen the educaticoa sector's performance, previous World Bank reports on education in China have emphasized the need tos (a) improve planning and management of education institutions in order to increase their internal and external efficiency; (b) enhance the quality of primary and secondary schooling; and (c) improve equity in the provision of educational opportunities, particularly in poor areas. Continued progress on these fronts is a priority to reinforce the country's continuing reforms in agriculture and industry. Improvements in the education sector--designed to enhance the reE,?onsiveness of educational inatitutions to the human capital demands of a changing economy--must go hand-in-hand with reforms elsewhere that affect the Incentive structure governing economic activity and the allocation of national, provincial and local public resources. 3. Implementing the needed changes requires a bette: understanding of planning and financing mechanisms at the provincial level, since the economic and educational reforms of the early 19809 have decentralized decision making and financial responsibilities to provincial and local authorities. This report examines the planning and financing of education in two of the poorest provinces, Guizhou and Shaanxi, in order to assess the effects of financial reform on schools, colleges and universities in the least prosperous regions. The study makes recommendations addressed to local, provincial and national authorities for improvements in planning and management of education. Although these recommendations are based on detailed analysis of only two provinces, given China's uniform policies and practices, many of the report's conclusions about efficiency and equity of educational provision may be relevant to the whole of China. Key Issues of the Sector 4. Basic Educationt Socioeconomic Disparities and Internal Efficiency. Changes that have taken place outside the education sector since 1979 have had an impact on schooling processes and organization. The introduction of the new agricultural responsibility system and the growth in rural incomes has substantially benefitted the provision of schooling in the prosperous rural areas. Education finance bureaus, established in villages and towns, replaced ix- the comnune system of financing rural schools. These bureaus have been successful in increasing both the budgetary and locally generated resources for education. Overall, the expenditure per primary school child has almost doubled in real terms during the decade of the 80's. However, expenditures in city and town schools have grown fasteg than those in small village schools. 5. Several factors account for the growing disparity. First, financial reforms have been instituted to transfer the financial responsibility for primary and secondary schooling, teacher training and provincial universities to provincial and local governments which now must finance education from local taxes and household contributions. In urban areas, schools benefit from categorical grants from the provincial or national government, but rural primary schools rely entirely on local community support. Since poor communities are much less able to mobilize local comunmity resources than rich ones, wide and growing disparities are beginning to emerge in the sector. Many rural schools, particularly those serving small poverty-stricken comumities, are in poor physical condition, are inadequately staffed, and are poorly supplied in terms of books and other pedagogical inputs. Under these conditions, such schools tend to suffer considerably in the efficiency of their operations. 6. Teachers represent a major educational input, so the current arrangements governing their employment and assignment to schools have important effects on the actual distribution of educational resources across schools. Teachers fall into two broad groups according to their employment status and pay. Gongban teachers are officially employed by the government. In Shaanxi and Guizhou they received in 1989 about 100-110 yuan per month in pay plus benefits in the form of retirement pensions, food subsidies (by virtue of their *urban registration'), access to urban schools for their children, and wider alternative employment opportunities. Minban teachers, on the other hand, are hired directly by local authorities and do not get their salary from the government--but a living allowance. In Shaanxi and Guizhou this allowance eweraged about 70-80 yuan per month. They receive no retirement bene ts, and are not eligible for government benefits provided to people classified with an urban registration. In 1988, about 45 percent of China's 5.5 million primary school teachers were in the minban group; at the junior secondary level they represent about 15 percent of the teaching force of 2.4 million. At the national level Gongban teachers' average annual salary was about 1,780 yuan in 1988, (212 more than in 1987). Minban teachers living allowance was only about 400 yuan (72 more than in 1987). 7. The two track arrangement of teacher employwent contributes to urban-rural disparities and detracts from the efficient operation of schools. Because gŁonaban teachers have been trained in cities and have an urban registration (with the benefits this implies), they are often reluctant to work in rural schools. At present there is an oversupply of gonaban teachers, juxtaposed against reported shortages of teachers in rural areas. At the same time, many of the new graduates from teacher training institutes are not trained in subjects where there is a shortage of manpower, but in subjects where expertise existi, in the training institutes. In urban schools, the oversup-.y of gongban teachers results in relatively light teaching loads for -K- individual teachers. In contrast, rural schools are staffed mainly by the lesser-paid minban teachers and often face difficulties in recruiting and retaining their teachers. 8. The two track arrangement also affects schools' internal efficiency. Hinban teachers often take en other employment to supplement their income, and may not devote as much time to their teaching duties as would be desirable. More seriously, for what is perceived to be the same duties teachers in the same school may receive strikingly different pay and employment benefits. This gap is a source of resentment, eroding teacher morale to the detriment of student learning. At the same time, the limited prospects for better pay and terms of employment blunt the incentives that minban teachers have for upgrading their qualifications and increase their turnover, thereby making it difficult for quality enhancement to take hold in the education system. For these reason-, there is a case for phasing out the two track system of teacher employment. 9. Secondary Educations Quality and Labor Market Linkages. At the secondary school level, reforms undertaken after the Cultural Revolution have been successful in regaining quality standards which had been lout. Small inefficient schools were closed or consolidated into larger ones, and responsibility for their management and financing was clearly established, with counties being the lowest level of government authorized to run secondary schools. About 60,000 junior high schools and about 45,000 senior secondary schools which were previously run by communes in small villages were closed. The number of junior high schools decreased from abouit 136,000 in 1977 to 74,000 in 1988; and the number of senior secondary schools from 64,000 to 16,000. As a result of these reforms, enrollment in secondary education dropped from 68 million in 1977 to 46 million in 1983, but has since grown to 53 million students. Emphasis has been given to training teachers, revising the curriculum and introducing vocational training in the last three years of secondary school. 10. Although progress in regaining quality standards has been substantial, there remains room for improvement. It is recognized that China has developed very sophisticated and well understood methods for teaching. The country is nevertheless behind other countries in the teaching of technology and science. Compared with Thailand, Singapore, Hong Kong or Malaysia, the science curriculum in China continues to be very theoretical and abstract with little relation to daily life. Topics such as the environment, accounting principles and applications of chemical principles to farming processes are covered in a very marginal way with emphasis given to abstract formulae and theoretical scientific concepts. Only the few children who attend key schools have technology related courses and scientific applications as part of the extra-curricular activities. For 902 of Chinese students, science courses are devoid of pra&.tical applications. There is thus a need to bridge the gap between the scientific principles taught in schools and their application to resolving real problems. 11. A second area of concern is the role of secondary schools in a fast changing economy. Emphasis is now given to expansion of secondary vocational -xi- schools run directly by education bureaus. But several considerations suggest caution with this policy. First, the cost of vocational schools is about two to three times as high as that of general oecondary schools and there is no evidence that graduates find jobs more easily or are better prepared to continue their education. On the contrary, graduates of the Bureau of Education vocational secondary schools frequently take longer finding jobs and report lower salaries than graduates from the Ministry of Labor skill training schools or from the Bureau of Education general secondary schools. Second, international experience, widely discussed in the literature, has raised serious doubts about the cost-effectiveness of vocational training in secondary schools. In this context, China could well benefit from a closer look at its own policies in this regard in order to avoid the pitfalls that are nighlighted in a recent World Bank policy paper on vocational and technical education.11 12. These considerations are reinforced by changes in laJ-_ market conditions which are seen as essential to support the country's reforms in the industrial sector. Recognizing that a more open and dynamic labor market is needed in order for enterprise reform to succeed, the former system of controlled labor allocation is no longer applied across-the-board. Progress on this front has been hampered, however, by the poor employment prospects and job opportunities, particularly in rural areas. As a result, while the labor market is beginning to shift in a new direction, its diverse characteristics and inner workings are as yet poorly understood. No system is currently in place to monitor the changes in the labor ,,rket. Partly owing to the lack of information, education institutions have been timid in introducing job counselling systems or in tailoring course curricula to reflect potential career choices. Improving the linkage between schools and the labor market under these circumstance remains a clear challenge for the system in the decade of the 909. 13. Higher Education: Costs and Plexibility. Three major problems stand outt (a) efficiency of Chinese universities is generally low, resulting in relatively high unit costs; (b) courses are highly specialized, reducing the match between graduates' training and the economy's fast-changing demand for qualified manpower, and the ability of graduates to respond to and work with new technology; and (c) the distribution of public resources across universities is skewed, with institutions financed by the central government receiving substantially more funding than those supported by provincial authorities. Low internal efficiency can be traced in part to the fact that China has a relatively small university system, and individual institutioLs enroll relatively few pupils. These characteristics, combined with the I/ Skills for Productivity: Policies for Vocational and Technical Education ar4, Training in Developing Countries. World Bank-Draft 1990. -xii- existing patterns of staffing, lead to excessively low pupil-teacher ratios and underutilization of facilities, making China's system of higher education more costly than those of other countries in the region. Specific Recommendations 14. Resources for educational develooment. The Bank's 1985 report entitled 'Chinai Issues and Prospects in Education' concluded that the Chinese government should be able to meet the recurrent cost of a universal nine-year basic education system provided two variables are carefully controlleds la) the number of teachers; and (b) the vocationalization of secondary education. The situation is very much the same today and detailed projections of costs for the two provinces studied in this report confirms this conclusion. In particular, if student-teacher ratios are kept at present levels, teacher salaries are allowed to grow in line with per capita GNP growth, and equipment costs for vocational programs follow cost saving considerations, government financing for education would need to grow by 3-4Z a year. The prospects for such an increase is favorable, given the country's population growth trends and economic performance. This report recommends that in the allocation of the anticipated Increase, continued emphasis be placed on the lower levels of education, in line with the gtovernment's goal of their universalization. If all budgetary increases were allocated to basic education, the budget for this level could 6.ow by as much as 6-72 a year, making it possible to finance capital requirements and a possible increase in teacher salaries. 15. In view of the decentralized arrangements for educational finance, attention is warranted to address the problems of emerging and widening urban- rural disparities in resources. While vigorous efforts to diversify the sources of school funding should continue, given its generally positive effect on raising the total amount of community contributions to support education, there is evidence that the provision of adequate funds for schooling is beyond the means of small poverty-stricken rural communities. Thus. in addition to ensuring that basic education obtains a major share of the anticivated increase in educational resources, it is recommended that the government carefully target the extra resources for this subsector to low income areas, particularly communities with below poverty-level per capita incomes, taking account of demographic trends including migration. To ensure that targeting is effective, it will be necessary to increase central and provincial government transfers to very poor areas, earmarking the funds for the intended use through categorical grants and establishing mechanisms for monitoring expenditures. (See Chapter III section on Financing Policies, Chapter IV section on Inequalities in Education Financing and Difficulties of Poor Provinces as wall as section on Categorical Grants for Disadvantaged Areas). 16. Improving basic education. As indicated above, several of the issues ln basic education warrant attention, including the need to enhance equity, efficiency and quality. First, the absence or inadequate supply of books severely hampers the educational progress of children in the very poorest communities. The report therefore recommends that free textbooks be provided to children from disadvantaged areas, accompanied by improvements in -xiii- teaching processes in small one-room schools to enhance the effectiveness of this intervention. The costs involved in these changes are likely to be modest, and are likely to be outweighed by the expected benefits. A new set of bilingual textbooks costs about 20 yuan and can last for about 3 years. It represents less than 22 of the total per-pupil costs of primary education; if provided on a carefully targeted basis, the aggregate costs is estimated to represent only 52 of direct public expenditures. Alternate projections presented in this report suggest that the proposed impeovements are financially viable and sustainable over time. If implemented, this intervention would greatly reduce the gap in educational quality between urban and rural schools, and would also help to improve primary school retention and completion rates in rural areas. (see Chapter III, section on Curriculum and Chapter IV section on Underfinancing and Resource Mobilization). 17. As a further intervention to improve equity, the report also recommends that the government help to reduce the private costs of primary schooling in poor rural areas. These costs involve parents' expenditures for textbooks, uniforms, school supplies and fees. In minority areas, reducing the direct costs of primary education is particularly important for female students. For minority groups, consideration could also be given to the introduction of bilingual programs to attract children with little or no knowledge of the Han language, thereby improving the chances of their continuation in school (see Chapter IV section in Inequalities in Education Financing). 18. The report's analysis also suggests that careful attention to the employment and utilization of teachers is needed to promote the efficient operation of schools. As a short-term measure, it is recommended that the workload of urban teachers be better distributed, and that in future there be limits on the hiring and assignment of governtent-employed gongban teachers in urban areas. Over the longer horizon, the report recommends that the minban- gonban distinction, in incomes if not in status, should be phased out. The government initiated a process for converting minban teachers to gongban status. However, only a limited number of teachers have had their status changed so far, suggesting difficulties in implementation of the plan. Providing minban teachers with urban status might be counterproductive. It is also recognized that increasing minban teachers' pay in certain cases may not represent the best use of funds to raise the performance of schools (even if it has a positive effect), since: (a) teachers are only one input, albeit an important one, into the system; and (b) the costs involved are substantial. Taken together, it is clear that while a case exists for augmenting the pay of minban teachers and improving their status, economic considerations require careful assessment of this policy. As a general rule, it would be desirable if, in changing employment conditions care was taken to avoid the guarantee of lifetime employment. As for levels of salaries paid, the diversity of conditions across China militates against the imposition of a single policy. The report recommends that local authorities be encouraged to attune the pay of teachers to local conditions, raising it, for example, in areas where they are particularly difficult to recruit or retain (see Chapter III section on Minban Teachers; Chapter IV inequalities between Gongban and Minban teachers). -xiv- 19. Strengthening secondary education. Several interventions could be considered to improve the efficiency of resource utilization, as well as enhance its linkage to the labor market. The report recommends that efforts be made to raise pupil-teacher ratios so that the resulting savings could be used to increase expenditure on non-personnel inputs such as library aids and school equipment. Successful experiences with these policies need to be more widely generalized. Provincial and local education bureaux should aim to allocate additional resources for non-salary expenditures and building maintenance, so that by 1995 non-personnel items would represent at least 10O and building maintenance 5Z of recurrent budgets (see Chapter III section on Substandard Education Expenditures). 20. The report also recommends efforts to reorient the content of science education to increase its emphasis on applications. To implement this desired change calls for careful attention to the selection of teaching equipment. Currently the equipment available in Chinese schools is sophisticated and adequate only for complex experiments. There are few teaching aids constructed by teachers and students from simple materials to help relate text materials to real-life applications (see Chapter III section on Curriculum and Teaching). 21. With regard to the labor market linkages of secondary education, there is a general need to improve knowledge and information about the emerging labor market in China. Prefectural education bureaux should move speedily to establish closer links with labor bureaux to better understand the changing labor market conditions, as well as to improve their monitoring of job opportunities and possible career choices for graduates. In the light of international experience, the government should review its intention to expand vocational schools up to 50 of the system. Instead, consideration could be given to shifting the responsibility for skill training to labor bureaux, whose training schools appear to perform better than highly specialized vocational schools. (see Chapter III section on Financing of Education- Vocational Education). 22. The labor market linkage consideration is also relevant in considering the future of teacher training institutions. Given the current oversupply of teachers, and the prospect of declining enrollments because of diminishing fertility trends, the graduates of such institutions would increasingly need to seek jobs outside the teaching sector. The report therefore recommends that provincial authorities with oversight for the planning of teacher training should aim to reduce the number of graduates from teacher training schools by encouraging changes in course offerings and program diversification. Teacher training schools should in time become comprehensive schools as they have in other countries which have faced declining school rolls as a result of declining birth rates (see Chapter III section on Teacher Training). 23. Building up Higher Education. The Government has decided that the main emphasis in higher education should be on quality and efficiency improvements rather than on expansion, given current conditions in China. To achieve this goal, it would be necessary to increase internal efficiency so as to permit a reallocation of resources from personnel expenditures to such inputs as books, journals and basic equipment. Possible solutions identLfied in this report include Internal reorganization of departments and courses, merging of small institutions and, in some cases, closing of very small and inefficient ones. The costs and benefits of a program of rationalization are estimated and the feasibility of this policy is examined in the light of political and administrative obstacles. It is understood that solutions to efficiency problems are not easy, especially when possible staff reductions are envisaged. Also, solutions require agreements among various ministries, bureaus and prowincial and prefectural authorities responsible for provision of higher education. In the past, these agreements have not always materialized and coordination efforts have not been easy to achieve. The report suggests that problems could be overcome by providing adequate capital incentives that would allow the needed mergers and internal reorganizations with quality improvements. Exaples of experiences already undertaken in this regard show some potential for success. 24. For reasons stated above, it would be desirable to reorganize course offerings in Chinese universities to reduce excessive specialization in order to enhance their flexibility. To this end, universities should be given freedom and incentives to respond to changes in the labor market. At the same time, national and provincial authorities should dismantle the old system of manpower forecasts based on fixed coefficients that have little relation to the reality of a changing economy. This report strongly recommends replacing the old system of job assignments with one of job placement assistance and counseling services. Movement in the recommended direction would be appropriate as developments elsewhere in the economy result in greater flexibility in the labor market. CHINA - PROVINCIAL EDUCATION STUDY CHAPTER Is INTRODUCTION 1.1 Backaround and Justification. This sector study is the fifth World Bank sector report dealing with education in China. Previous reports are comprehensive in their description and analysis of the Chinese system of education in the early 1980's. Taken together these reports covered the goals of the national education system, the structure, contest, quality, administra- tion, costs and financing as well as an assessment of the internal and external efficiency of the formal education and training systems and a set of explicit recommendations for future education development.l1 A summary of the reports is in Annex 1.1. Main broad recommendations, vhich have been reflected in seven World Bank Education loans to China include the: (a) need to expand the higher education system, given that only 1 percent of college age students enter higher education institutions compared to 10 percent in other Asian countries; (b) need to strengthen vocational education and teacher training, (c) need to improve the quality of textbooks and the supply of library materials; (d) need to increase the financial resources for education both as a percent of GNP and as a percent of the governments budget. 1.2 Other priority areas emphasized in previous reports include: (a) the need to improve the planning and management of education institutions in order to improve their internal and external efficiency; (b) the need to improve the efficiency, quality and quantity of primary and secondary schools which are managed and financed by lover levels of government (prefectures, counties and townships); asI (c) increasing financial support from higher levels of government for schools in poorer areas to Improve equity in the provision of schooling opportunities. 1.3 Implementing these recommendations requires a better understanding of the planning and financing structures at the provincial level which is the 1/ Names of previous reports ares Socialist Economic Development - Volume III - The Education Sector (1983); Chinat Issues and Prospects in Educa- tion (1985); Management and Finance of Higher Education (1986); Technical Vocational Education for China's Development (1987); China Textbook Development (1987). 2- focus of this report. Bank experience with primary and secondary schools and with local levels of government is thus far limited to the education components of two credits: the education component of Gansu Development project and of the Medium Cities Project. Lessons learned through implementation of these projects are: (a) decentralization of policy making as well as financial responsibility is gradually changing the way schools operate in China. Income disparities among provinces and among regions influencee the efficiency, quality and quantity of education provision; (b) poor counties, with the least expertise and ability to do it, are being made responsible for planning, running and financing their schools, causing them to fall even farther behind than the more advanced regions;, Cc) school financing and management practices are very diverse and becoming more varied as decentralization deepens; (d) influencing the way schools operate requires a combination of national, provincial and local measures, and a feedback and monitor- ing system that alerts all levels of government to the Impact of new measures and policies being introduced. SCOPE OF THE REPORT 1.4 The present report summarizes and reviews the planning, management and financing of education from a provincial perspective. Two provinces are analyzed in detail: Shaanxi and Guizhou. Table 1.1 shows summary economic data for the two provinces. Shaanxi has about 30 million people and it is uniformly inhabited by the Han nationality, the major nationality in China; about 20 percent of the population is urban. It is one of the poorest provinces in China, ranking as number 28 among 29 provinces, with income per capita estimated to be only 441 yuan in 1987 compared to the national average of 600 yuan. Xian, the capital city, has a history of about three thousand years and due to very interetiting discoveries of 6,000 terracotta warriors dating from 300 BC, it is now a famous tourist center. Guizhou, in the South West has a total population of about 29 million with 252 made up of non-Han people, mostly Miao nationality, who speak the M4iao language at home and are considered a minority among the Chinese. Income per capita was 447 Yuan in 1987, placing Guizhou, like Shaanxi, among the poorest provinces in China. 1.5 For development purposes, China classifies the provinces into three groups: first, the coastal provinces, which are considered to be the most developed, followed by the middle provinces which have achieved a medium stage of development; and thirdly, the western provinces which are the least devel- oped. Both Shaanxi and Guizhou are in this third category. Detailed data on all provinces is in Annex 1.2. - a - Table l.I: PROVINCIAL POULATION AND ANNUAL INCOME PER CAPITA Population /a Annunl lncome Per Capita WIlghted P ~~~~Vr*96 Province Total Urban Urban Ratio Urban l Rural Le Annual Incoe (N) (Yuen) (Yuan) Per Captal (Y) Total 1,008,942,628 206,809,144 20.6 1,012.2 402.66 676 Beijing 9,280,688 6,900,196 04.7 1,1*1.88 916.U8 1,086 Tianjin 7,764,187 5,8B8,816 68.7 1,094.64 749.41 987 Nobel 5,005,607 7,258 936 13.7 938.6 444.4 611 Shanxl 26,291,450 5,814,617 21.0 81S 870.87 469 Inner Mongolia 19,274,261 5,661,348 28.9 828.08 8M.77 514 Ltnoning 8S,721,694 15,182,301 42.4 1,001.62 699.26 770 Jilin 22,660,024 6,941,116 89.6 826.44 628.09 648 Neilongjiang 82,665,612 18,110,478 40.1 888.96 474.46 641 Shanghal 11,6S9,700 0,975,136 68.8 1,847.6 1,059.21 1,229 .lingsu 60,521,118 9,672,190 16.8 1,10i.72 626.48 702 Zho.jlng 86,664,593 9,96.931 26.7 1,227.72 726.81 654 Athul 49,666,947 7,081,468 14.2 906.04 429.26 497 Fuj Isi 26,672,917 5,460,122 21.2 1,071.46 484.88 009 liangxi 88,186,471 6,462,917 19.4 790.2 429.29 499 Shandong 74,419,162 14,100,601 19.1 992.76 517.69 608 Hoan 74,422,578 10,"1,790 14.6 818.04 877.72 441 Robol 47,608,118 0,279,094 17.8 960.6 460.66 647 Nunan 54,010,166 7,674,068 14.2 939.24 471.8 688 Ouangdons 66,299,620 11,042,76 10.9 1,887.64 644.71 76 ouansxi 86,421,421 4,807,094 11.8 1,002.96 868.96 481 Sichuan 99,781,264 14,288,199 14.8 980.16 369.40 457 Guizhou 28,662,942 6,402,205 18.9 897 841.84 447 Vunnan 82,658,099 4,218,109 18.0 1,001.28 364.67 447 Tibet 1,692,224 179,186 9.6 NA 848.89 NA Shaanxi 28,904,S89 6,490,516 19.0 916.8 829.47 441 Gansu 19,696,191 8,002,496 16.8 NA 296.14 NA Qlnghai 8,89,695 797,907 20.6 1,088.96 892.16 684 Mingxis 8,896,670 876,941 22.5 960.98 882.71 618 Xlnjlang 18,081,5S8 8,714,841 28.4 988.04 462.72 008 Statistical Yearbook of China, 1987, State Statistical Bureau, Hong Kong, 1988, p. 78, p. 897. qQuanquo Ch.ngzhn Jumin Ji ating ShouzhI Dlnocha ZilIso (Survey on National Urban Fataly Income) National Bureu of Staistics, China Statistical Proe, 1988, p. 96, p. 287. Lc Statistical Yearbook of China, 1909, State Statistical Bureu, China Statistical Press, Beijing, 1969, p. 740. - 4 - 1.6 Although both provinces are poor, they differ in terms of their educational development. Table 1.2 compares the provinces of China in terms of three indicators: higher education enrollments per 10,000 population, secondary school enrollments per 10,000 population and the net enrollment rate in primary education. These three indicators are combined to give an index of educational development, and the provinces are ranked in terms of their overall score. On the basis of this index, Shaanxi is one of the most developed provinces, with levels of primary, secondary and higher education enrollment well above the average for China as a whole. One the other hand, Guizhou is one of the least advanced, with the lowest enrollment rates in China (apart from Tibet). Differences in education development are not easy to explain. One possible hypothesis is that Shaanxi has been a cultural center, with national universities and national research centers established there since the beginning of Communist rule. Another explanation is t;hat education offers high returns in Shaanxi, with educated young people able to move into urban areas or to expand their agricultural activities. Guizhou with little infrastructure, offers few advancement possibilities for educated youngsters. 1.7 The two provinces, therefore, represent sharp contrasts: Guizhou is typical of provinces in the southwest which are poor and backward in educational terms. Shaanxi represents a poor province that places high priority in the provision of educational services. lm I~ EDMT OVELOPUMET mom IS voX ~ ~ ~~~~~o Piiul No.o Hlw E Gei i u fm PoWlaw C~oe Rai eeces SecomV f Anb_ Pdmuw .UAtI pi astudebt Stdent Stde No_ Finai FinWl Psi 1O,O PO 10.000 pei O,i 00 EqihH so" Rankin TOW 1.09l,140.000 1t0.s 43.1 47. .11 23.710.000 30.75 0 a"" 041*? 4 t 0% t0 go I XWIl_I 1425Q0000 21.12 10 606.04 7M1T0 I gm 10 1 2 Usn 3120.000 31.m 4 513Ot 77m a us 10 12 3 SeWn 10,810,000 13z79 I 434.14 WA.0 la am 10 22 4 SHAANiO 31,.350.00 312 a 514GM iY 8 gm 10 24 5 "to-Ope" 34,680.000 22.76 9 5740 Gum a Om 10 24 a fSad 27.550.000 17.95 12 O5.t 645O1 a g 10 25 7 Tlanjn 6.430.000 62. 3 419.03 401.7 l5 a lam 10 as a taw Mongolia 20.09000 15.6 16 5i2 614.7? 0% 10 32 9 Hubei 5650x0o 2s.0a8 7 4361 4651 10 gm 10 t 3 10 Ssengba 2."620.0 10118 2 1a51 446.4 22 lam 10 34 1t1 hlPia 4.45O,OtO 17.24 13 621t6O 676t7 2 am so 12 _wa4e3 64.0,0 22.B4 a 404.00 460 18 am 10 30 13 Jlagid 36.0000 14.45 21 4210 57O 11 6% 10 42 14 Heblan 6260.000 14.54 19 420 1.tis la gm 10 42 15 uaodong 59.2A0.000 16.40 14 411J9 4674 1s am 10 43 1i FurIu 28.450.00 20.06 1t 377.75 422*" t 5 Om 10 46 17 am" 21.86e0O0 15.47 I? 50O.18 i 40.47 0 02% 2 0 47 18 sktn N0,610O000 126 24 46 606.0 14 06% 10 48 19 Hunan 500000 14.62 1s 425J? 48 1 as 10 48 20 O itaih- 4.340.0 16.16 1s 572 am 7 0% 10 52 21 Zhelieg 41o4.700.00 14.49 20 407.05 44.0 06a 10 53 22 Hlin 0O.940.000 0.t 27 443.04 4761 17 gm 10 54 23 Anbuai 53."O,000 11.74 26 412.60 4t in t % S1 24 14. 8 57,0000 12.01 22 19.0S 43674 n 4 as 10 ST 25 Sifuan t O5,?flO,OO 1I3 22 3774 400.10 as am 10 so 26 Guapri 4060i.000 018 2t8 1a21O St1.2 go am 10 so 2T Yunnian 35.940.000 12.52 as 821O WA 37 a % so 72 28 GU10HOU 31*70.00 6.72 29 313.41 340.14 go us s0 06 29 That 2,120.C0O 0.19 30 107.5 106.0 1o 46 40 100 30 soofoo: ClaS Sttislie Yearbook 1069. P. W. P.817, p.. p. 0F fi Th daa or ppuy education cainm fm Chna Sf tIef Yweb1ook. 1067, pp. M Tie dabt f tiei prene we pinbed eom Guano" p_sas CHWATER Ilt THE NATIONAL CONTEXT FOR EDUCATION REFORM 2.1 As a result of reforms in agriculture, industry and public finance, the 1980's saw major reforms in education. A 'Compulsory Education Law' was passed in 1986 after the Government issued its "Decision to Reform the Educa- tion Structure" in 1985 (see Annex 2.1). This has been the most significant reform of the Chinese education system since 1949. A major change introduced in these reforms is the decentralization of education finance responsibility and an increase in government budgeting appropriations for education. After 1989, however, the implementation of these reforms has been slowed down and it is not yet clear what the government plans to do regarding financial and managerial decentralization during the 1990's. A development plat. is being prepared and discussed in the People's Congress but has not yet been cirLulated. Authorities have in. armed the Bank that 1990 and 1991 are considered years of consolidation and stabilization of the education system with no growth in education budgets and no further push for reform. This chapter describes the changes that have taken place s4nce 1979 and how they affect the environment in which education takes place. It also describes the national education reform of 1985 and outlines structures and policies of the education sector. THE ECONOMIC REFORM PROCESS 2.2 Agricultural reforms were introduced in 1979 aiming at promoting modernization and economic growth. Changes have taken place in pricing sys- tem, and in the nature and land tenure. As a result, there has been a change in the structure of village governments. Communes have been replaced and nciw families pay taxes and contribute to welfare funds. 2.3 Agricultural reforms have had positive and negative consequences for education. On the positive side, because the gross value of agricultural production rose by about 102 per year between 1980 and 1987, most townships have been able to allocate more resources for education. Local allocations to education have risen steadily during the 1980's. Also, employment possibili- ties in transport, commerce and services have increased providing better job opportunities for educated youth. However, in the fast growing provinces there has been a decline in secondary school enrollment because many families prefer to employ children productively on the farm. The opportunity cost of going to school has risen and schools do not look as attractive to the parents as they used to. Also inequality among districts and among villages has ris- en. Townships that collect little from taxes find it hard to pay teachers. Since teachers are no longer sharing the products of the commune, they have to farm for profit. The direct and indirect costs of schooling are beyond the capacity of rural families in the poorest districts as will be seen in Chap- ter V. 2.4 A major challenge that results from industrial reform is how to adapt job seeking and allocation mechanisms to changing economic incentives. Up to now, university graduates and graduates of general secondary schools have been assigned jobs for life. With the increased possibilities of employ- ment by contract and job changes, the role of education institutions needs to change. There is no longer a need for all graduates to be narrowly special- ized, as they are now. In future, graduates needs a broader training so that they may adapt to changing jobs and to changing job requirements. Education institutions have been ulow in responding to changes in the job market, and attempts to change the job allocation system have had very limited success. Leforms in Public Finance 2.5 As part of the overall economic reform, public finance underwent major changes in the early 1980s. The changes in public finance preceded and provided the preconditions for the reforming education finance that occurred in the second half of the 1980s. 2.6 Before 1979, public finance in China was very centralized. It was characterized by the practice of "complete collection and complete distribu- tion* (known as 'tong shou tong zhi' in Chinese), that is, a system in which lower-levels of government transferred all tax revenues collected at the local level to a higher-level government (e.g., county government to provincial government. or provincial government to central government). In return, al'. expenditures were financed through grants from higher-levels of government. All tax revenues were ultimately controlled by the central government which, in turn, financed all government expenditures at every level. All lc-*er-level governments either received a subsidy from higher-levels (if locally collected revenue was less than expenditure) or provided a surplus to a higher-level government if tax revenue exceeded expenditure. The initial amount of government expenditure at each level was determined incrementitlly, and was based on the previous year's expenditure plus a fixed growth rate. Growth rates were adjusted annually to achieve overall financial balance and to take account of unusual circumstances (e.g. natural disaster) in particular regions. Since economically less developed regions usually received subsidies while more prosperous regions produced a revenue surplus, the public finance system between 1950 and 1980 had strong equalizing effects. One draw-back of such a system was that it provided no incentives for provincial and local governments to improve financial conditions. Within each level of government, allocations among different sectors and subsectors were also determined incrementally, and growth rates were adjusted such that an overall fiscal balance was obtained. 2.7 In 1980, a more decentralized system of public finance known as 'eating from separate pots' (known as "fen zou chi fang* in Chinese) was announced. This has given lower levels of government more responsibility and autonomy in financial decisions, and more incentives for improving financial conditions. In the classification of tax bases, taxes are grouped into three categories: central taxes, provincial/local taxes, and common taxes. Central taxes are collected by the central government only; they include, for example, sales, business, and commercial taxes. Provincial/local taxes are collected. by provincial and local governments only; they include, for example, agricultural taxes, taxes on special forestry products, and taxes on building construction. Common taxes can be collected by central and provincial/local governments; tb-y include value-added taxes and taxes on income. Common taxes collected from enterprises owned by a particular level of government become tax revenues for that level of government. Tax classification thus, specifies the revenue base of each level of government, and each level of government is -a - primarily responsible for its own expenditure. If economic conditions lmprove so that tax revenues increase, each level of government can keep any addition- al revenue and can decide how to spend it. Similarly, if any government decides to increase expenditure in particular areas, it has to finance this from its own tax revenue. In moving from a system of 'complete collection and complete distribution' system to the *eating from sepzcate pots', a five-year transition period has been established. During this period, the level of subsidy for a subsidized government is set equal to the average of the subsidies received in the previous three years; and the surplus for a subsidizing government is set equal to the average of the surpluses in the previous three years. After the initial five years, the level of subsidies and surpluses for each provincial or local government will be recalculated periodically. There is no evaluation of the reform but it is now understood that further reforms are needed becAuse the present system, with cumbersome contracting arrangements between higher and local levels of government, has not permitted raising the elasticity of local tax systems. During 1989 and 1990 revenues were below estimated fiscal targets. As a result even though there has been economic growth, the budgetary increases have not materialized, and education budgets have not growtn as expected. Reforms in Education Finance 2.8 Before 1980, all public expenditures on secondary and hither education came from the central government. Targets for total public expenditure on secondary and higher education were determined at the central level and a percentage of the national budget was allocated to secondary and higher education. The total amount of public funds for secondary and higher education (and for other sectors) was determined incrementally on the basis of the previous year's allocation plus an allowance for growth. Funds were transferred from the Ministry of Finance to the Ministry of Education which then allocated the education fund' to the education departments in the various provinces, autonomous regions, and municipalities which would in turn allocate their public education funds to the education bureaus in their respective counties. The amount of public education funds received by each education department/bureau was also determined on the basis of the previous allocation plus a fixed increment. The growth rates were adjusted annually so that the total allocations to the provincial education departments equalled the total national education budget for the Ministry of Education, and the allocations to the county-level education bureaus equalled the total provincial allocation from the Ministry of Education. Within each county, public funds for educa- tion were allocated directly by the education bureau to schools. Thus, under this system, allocations of government funds for secondary and higher educa- tion were made within the education sector, from the central level down to the county level and to individual education institutions. Primary education, on the other hand, was not financed or managed by the central government. Primary education was the responsibility of the provinces. Primary schools were under the administration of county governments. Rural primary schools were financed by community contributions. Primary schools in urban areas were supported by the government at the county level or city level. Education institutions at all levels were regarded as being owned by the state. - 9 - 2.9 As a result of the 1985 reform of education finance, public funds for primary and secondary education are allocated by the provincial and local government and decisions are made by the finance bureaucracy at the appropri- ate level, rather than by the education bureaucracy at a higher level. Finance bureaucracies now exist (or will be set up) at five levelss Ministry of Finance at the central level, Department of Finance at the provincial/ autonomous regionlmunicipality level, Bureau of Finance at the prefecture level, Bureau of Finance at the county level, and Office of Finance at the townitownship level. (Note that there is no finance bureaucracy at the village level and financial matters are handled by the village committees). Each level of government has financial responsibility for, and is the primary source of public funds for education under its jurisdiction. In a sense, the schools in a given area belong to the government of that area. Decisions regarding public spending on education are made in the administrative office of the government at that level; and a portion of the government budget is allocated to the education bureaucracy at that level. When counties or town- ships face financial difficulties, education budgets are reduced. This has been the case in 1989 and in 1990. Poor counties, with dec-easing fiscal revenues, have drastically reduced their allocations for edi..ation. 2.10 The presence of categorical grants provides a secoui (but relatively minor) source of public funds for education. These are grants for specific categories of expenditure. Higher levels of government (at and above the county level) often set aside a small percentage (1-32) of their education budgets to be given to lower levels of government for specific purposes, such as the elimination of dangerous buildings, replacement and repair of school buildings, subsidies to teachers, developments in teacher training, develop- ments in vocational and technical education, subsidies to five types of disadvantaged areas (that is, revolutionary, minority, mountainous, remote, and poor areas) and others. These grants reflect particular objectives or the areas of concern of the higher levels of government. They are often equaliz- ing in nature, in that they are given to lower levels on a matching basis and poorer areas receive more favorable treatment; some of these grants are given only to disadvantaged areas. Decisions about the allocation of categorical grants for education are made by the education bureaucracy at a higher level of government after lengthy and complex negotiation processes. The grants are then *passed down" to the finance bureaucracies of the lower levels of government, which, in turn allocate the grants to the educational bureaucracies for actual expenditure. Increases in categorical grants will be needed in the future to compensate for reductions of fiscal revenues in poor counties. Financing of Rural Primary Schools 2.11 The financing of village primary schools remains as a serious issue. Categorical grants for school construction and school repairs are distributed to governments at or above the town/township level, thus excluding grants for village schools. Before 1980, village primary schools were constructed by the communes through their production teams or production brigades. In the post- 1980 period there is no community organization that can be given the task of building schools. Primary schools are therefore built with voluntary contributions collected by the school principals. In poor communities, the - 10 - collections for building and repairs are very small and not sufficient to cover the needs. Schools are therefore in poor conditions, receive little maintenance and often are in dangerous conditions. Furniture and basic school supplies are also lacking in small poor village schools and because, in principle, they should be provided by voluntary contributions there are no budgetary allocations to cover the existing and future needs. 2.12 Budgetary allocations for recurrent costs of village schools are also very small. The government pays a subsidy to locally hired teachers (about 50 yuan a month) and expects the villagers to contribute the difference. Locally hired teachers (minban teachers) represent about 50 of all primary teachers in China and there are no provisions in the government budget to pay for their salaries. The policy continues to be that these teachers should be paid directly by the villages that employ them. - 11 - EDUCATION POLICY REFORM 2.13 The education reform announced in 1985 had five principal aims: (a) the gradual introduction of nine year compulsory education; (b) decentralization of primary and secondary education; (c) strengthening of vocational technical education; (d) increasing autonomy for universities and (e) introduction of the "principal responsibility systems". These five areas are explained in sequence below. 2.14 The Goal to Institute 9-year Compulsorv Education. One of the major goals of the 1985 reform was to institute 9-year compulsory education all over the country. At the time when the reform was formally announced, the official enrollment for five year primary education was 96S of the total population, but only about 60% of the children completed 5 years of school. 2.15 The idea in the reform was to classify the provinces into three categories, and to "phase-in" 9-year compulsory education according to the economic strength of the provinces. In the first phase, the coastal and most developed provinces, which constitute some 252 of the national population, would be expected to achieve 9-year compulsory education in the year 1990. In the second phase, the middle provinces with medium development in their economy and constituting 50% of the national population, would achieve the same goal in year 1995. Thereafter, the western provinces, which are least developed, would achieve the same at some later stage. Although the last target year was not specified, it was understood that the entire country would achieve 9-year compulsory education in year 2000. 2.16 In 1986, the People's Congress enacted the "Law for Compulsory Edu- cation" (Annex 2.1). The Law is not exactly 'law* as understood in the common sense. Most of the clauses are general goals to be achieved or desired (e.g., putonhua, the national language, should be used), others are appeals or encouragements (e.g., the community should respect teachers). However, there are clauses which ensure priority treatment for education or set specific targets. The most significant are attendance at the age of six or seven, the principle of neighborhood attendance, and "the two growths': growth in expen- ditures for compulsory education should exceed growth in general revenue and there should be a continuous growth in per student unit expenditures. 'State appropriations for compulsory education shall increase at a faster rate than state revenues from regular items, and the average expenditure on education per student shall also increase steadily' (Article 12). No tuition fees are to be charged for children or adolescents receiving compulsory education and the state is to establish a system of grants-in-aid to support poor students (Article 10). In addition, the state is to subsidize those areas that would otherwise be unable to introduce compulsory education because of financial difficulties, and is to assist those areas inhabited by minority groups with the provision of ftmds and teachers. 2.17 The Law also delegates the power to the provinces to draft and enact detailed plans and regulations to achieve the requirements and targets laid down in the Law. The provinces are virtually given the power to implement and monitor the institution of 9-year compulsory education. Thereafter, the provincial People's Congresses legislate their own target goals and regula- - 12 - tions for the realization of 9-year compulsory education. The national and provincial governments also issue circulares to address the practical issues 4n the implementation. 2.18 Decentralization in Primary and Secondary Education. Even before the announcement of the reform, there had been a shift in the early 1980s towards decentralization, with the introduction of a policy of "sponsorship at three levels, administration at two levels., The idea was that primary, junior secondary and senior secondary schools should be financed (sponsored) by village, township and county authorities, while the township governrent will administer primary and junior secondary schools, and the county government will administer senior secondary schools. The difference in pattern between sponsorship and administration is due to the fact that there is no government structure at village level. The new structure is known as ,management by levels', and is illustrated in Figure 2.1: Figure 2.1: MANAGEMENT BY LEVELS Sponsorship Administration (financial responsibility) (appointment of teachers) Village ---------- Primary Schools --------------------- Township Township ---------- Junior Secondary Schools ------------ Township County ---------- Senior Secondary Schools ------------ County 2.19 Decentralization was accompanied by reorganization of the Ministry of Education. It was transformed into the State Education Commission SEDC, a policy making body with little direct responsibility for management or administration. All managerial tasks were delegated to provincial authorities and SEDC only manages 36 key state universities. 2.20 The Emphasis on Technical/Vocational Education. The reform also called for restructuring of the secondary education system, so that at senior secondary level, enrollments in technical/vocational schools should eventually equal those in general schools. This meant a virtual freeze of the general stream and an expansion of the technical/vocational stream. The expansion of technical/vocational education has also been supported by a policy of ^training before employment", so that every one has to undergo some vocational training before taking up a job. - 13 - Table 2.1: GROWTH IN ENROLLMENT IN SENIOR SECONDARY SCHOOLS BY TYPES Annual Growth (2) As Z of Total Senior (over previous year) Secondary Enrolment Gen STS SWS VHS Gen STS SWS VHS 1984 9.7 N/A 21.7 43.0 65.0 12.5 6.0 16.5 1985 7.4 18.8 16.1 5.6 64.1 13.6 6.4 15.9 1986 4.4 11.8 20.2 16.3 61.7 14.1 7.1 17.1 1987 0.0 6.7 15.6 5.0 60.0 14.5 8.0 17.5 1988 -3.6 9.5 12.6 2.9 57.3 15.8 8.9 18.0 Note: Gen - General Senior Secondary Schools managed by the Education Bureaus STS - Secondary Technical Schools (including Teacher Training Schools) SWS - Skilled Worker Schools managed by the Labor Bureau VHS - Vocational High Schools (including Agricultural High Schools) managed by Education Bureaus Sourcess China's Education Statistics Yearbook, 1987s18; 1988:20; Ministry of Education (1985). A General Survey of Education in China, 1984, 21-22. 2.21 This reform policy reinforced the trend, since the early 1980s, of expansion in technical/vocational schools. Table 2.1 shows the growth of the various types of secondary school between 1984 and 1988. There was marked growth in the enrollment in secondary technical schools (which train technicians) and skilled worker schools (which train craftsmen). The growth in enrollment in the vocational high schools was even more remarkable in the mid-1980s, but slowed down due to saturation in some of the labor sectors and fluctuations in employment policies. Vocational high schools are a new type of vocational schools which are largely joint ventures in terms of sponsorship and are independent of the centralized job system. 2.22 Increased Autonomy for Universities. The underlying objective of the reform in higher education was, first, to release the central government from financial burdens and second, to augment local responsibility for the universities. One of the reform measures was to allow municipalities, as a sub-provincial authority to operate universities, whereas originally only the national governments and provincial government were given that power. The other significant measures included the delegation of finance and personnel responsibilities to universities, and in some cases to individual departments. 2.23 The idea of delegation was not totally new to universities in China. There was, in the early 1980s, an experiment in Jiaotong University, Shanghai which granted personnel and financial autonomy to the individual departments. The result of this experiment was that of 500 members of the university staff were declared redundant. Under the rigid employment system in China, this _ 14 - experiment proved too revolutionary to be generally acceptable, but the attempts had provided convincing evidence of the scope for possible measures to improve efficiency in universities. The reform in 1985 followed the same line of thinkir.g. 2.24 The delegation of financial autonomy has encouraged universities and colleges to diversify their sources of funding and has led to the emergence of a variety of self-financing activities. These include commissioned training where universities are commissioned and paid employers to train gra4uates, graduate recruitment fees where employers pay a college in return for employment of its graduates, professional courses and programmes which charge fees, and the sale of research services. 2.25 In late 1988, there were further pilot experiments in large cities to introduce block allocation of funding to universities. The block grant was calculated according to standard staffing ratios, but the universities were allowed to deviate from standard practice and utilize the funds in whatever way they found more efficient. The effects and reactions to this experiment have yet to emerge. 2.26 WPrincipal's Responsibility Systems. The reform in educational administration follows the trend established in the industrial sector where there is now a division of labor between the administration and the Party. In education this takes the form of the 'Principal's Responsibility System', which some provinces have introduced. 2.27 Primary schools were the first ones to implement the system. After introduction of the 'Principal's Responsibility System", the principal now answers to the education authority rather than the higher level Party leader. Many secondary schools have introduced the "Principal's Responsibility System", but the pace has been slower at the secondary level because many schools are located in urban areas and hence, in more political settings. 2.28 The conversion has been slowest in higher education. In fact, only a handful universities were identified as pilot cases in each province and changes were carried out with great caution. The pilot schemes were virtually suspended after June, 1989. Nevertheless, in most universities and colleges, devolution of responsibility to Departmental Heads has been widespread and effective. This means that the Department Head is given the autonomy to decide on the staffing within the department, and the discretion to utilize available funds under certain guidelines. In many cases, Department Heads are given the authority to enter into contracts for commissioned training. There seems to be ambivalent opinions regarding these changes and uncertainty in relation to the speed of the changes. GOVERNMENT PLANS FOR THE 1990'S 2.29 The Government's plans for reform in the 1990's, outlined in the 10- year plan issued in early 1991, continue to pursue at least two of the objec- tives initially set in the 1985 reform - nine year compulsory basic education for all children and provision of vocational education to 502 of secondary school students. However, the two remaining objectives - decentralization of - 15 _ primary and secondary education and increased autonomy fir universities have been changed. Decentralization of primary and secondary education has been slowed down and the emphasis in higher education is now to improve quality and efficiency by stabilizing student enrollment at its current level (2 million students). 2.30 In a report given by Mr. Li Tieying, Chairman of the State Education Commission, to the People's Congress Standing Committee, December 23, 1990, the basic point made was that "in the future ten years, the development of Education in China, should avoid big fluctuations in its size and try to achieve a stable pattern of development." The development of basic education was recognized as the major task with emphasis given to education quality. Secondly, vocational education would be developed and thirdly, higher educa- tion would be "adjusted' to meet plan quotas. This last point would be achieved through: (a) strict control of college enrollment plan; and (b) strict control or the establishment of new institutions. These controls would be accompanied by qualitative changes. The number of very specialized fields would be reduced while broader curricula would be introduced to offer graduates with qualifications needed in the new economic structure. Assessment of the Education Reform 2.31 There is no official assessment of the proposed reforms but local and provincial authorities are beginning to observe difficulties in its imple- mentation. Nine year compulsory education is by now a reality in urban areas but will not be achieved in rural areas as quickly as initially planned. Main difficulties are lack of resources at the village level to augment the number of locally hired teachers and lack of financial flows from higher levels to be able to repair and expand existing schools. In minority areas difficulties have also been encountered in attracting children to school and keeping them for the time needed to complete the primary cycle. These problems are explained in the following chapters. 2.32 Decentralization has been faster in some areas than in others. In Shaanxi all counties have already decentralized the administration of schools to township levels. In Guizhou primary schools are still administered at the county level. Lack of local administration structures and experience in handling resource is the main constraint to fusther decentralization. 2.33 Regarding technical/vocational education, there is a strong and growing political consensus at all levels of government to vocationalize the secondary schools. Bank reports, especially the 1986 report on vocational and technical education show the pitfall of this rolicy. Secondary vocational schools are about twice as expensive as general secondary schools and narrowly specialize graduates in areas for which jobs are scarce. Annex 3.5 in this report expands the point further. 2.34 The autonomy that was supposedly granted to universities between 1985 and 1990 has been severely curtailed. Enrollment quotas are being imposed from the center and there has been little or no progress in the reform of the job allocation system. Authorities, following Mr. Li Tieying's declaration, have explained that there will be no rapid changes in this regard for at least two more years. - 16 - 2.35 Reforms are, however, taking place at local levels. In the rural areas, as reform of the agriculture system continues, there is greater pressure to expand the provision of secondary schools and eventually, there will be pressure to expand the quotas for university admission. In poor rural areas. the basic need is still to establish the number of required classrooms and to appoint the necessary teachers. In urban areas, because it now takes longer to find jobs, schools and students are pressing to be able to find jobs through a more diversified and open job market system, there is less reliance or jobs allocated by the government. Consequently, pressures for further reforms are very stronr vithin education bureaucracies at local levels and within education instiŁutions. Local authorities are thus trying to balance these separate forcess ta) central mandates for consolidation and stabilization of enrollment quotas and (b) local pressures for expansion, curricular changes and freedom in job allocation practices. It is evident that it will become increasingly difficult to keep tight controls on enrollment at the center while -here are local pressures for fast expansion and willingness to pay for education at local levels. - 17 - CHAPTER III: STRUCTURE. MANAGEHENT, PLANNING AND FINANCING OF EDUCATION IN CHINA Introduction 3.1 This chapter describes the structure of education in China and its organizational, managerial and financial systems. It also presents the main issues affecting the development of education and indicates major challenges and constraints faced by the Chinese education authorities. Overall, it recognizes the achievements of the past but raises concerns about the sustainability of present arrangements. Major issues which need to be addressed includes (a) Inefficiency of primary and lower secondary education shown by such indicators ass (i) very high repetition rates (ii) low student/teacher ratios (iii) uneven distribution of teachers among urban and rural areas (iv) large proportion of incomplete schools i.e., schools that offer less than 5 years of schooling (v) poor indicators used to monitor development of education and achievement of goals. Quantitative indicators do not show inefficiencies such as repetition and student teacher ratios. There are no qualitative measures to monitor learning achievement. (b) Inefficient and costly vocational schools at the higher secondary level; (c) Inefficiently managed and narrowly specialized higher education institutions as demonstrated by: (i) high staff-student ratios (ii) low teaching work loads (iii) high proportion of non teaching staff (iv) low utilization of buildings and laboratories (v) lack of clarity regarding the size and purpose of the higher education system (vi) outdated job allocation mechanisms which do not reflect the needs of an open and dynamic society. - 18 - 3.2 The overall financing level of education seems adequate, but the structure of unit costs indicate several problems. There is a bias in favor of higher education and high per-student expenditure for university students relative to per capita GNP. This high per student cost exceeds the regional average, with the annual cost of higher education in China representing 199Z of GNP whereas the regional average is 1492 of GNP. This skewed pattern of unit costs will, in the future, exacerbate difficulties in financing lower levels of education. A substantial reduction in unit costs of higher education is recommended. This reduction can be achieved through approved efficiency probably in conjunction with increased reliance on private financing. 3.3 Equity related issues need to be addressed. Rural schools are under financed and at present there are no mechanisms in place to guarantee regular payment of minban teachers (locally hired teachers) nor to finance recurrent costs of schooling in poor communities. To address this problem, there needs to be a mechanism for transferring resources from central to local levels of government. Criteria for effective targeting of these resources needs to be developed. 3.4 It is recommended that additional resources for education, (which will be available in future years when the economy is expected to grow 3 to 42 per year), be allocated to primary education in poor communities. These resources should be used to raise income of minban teachers and to lower direct costs of schooling to rural parents whose i-ncomes are currently below the poverty line. It is further recommended that, in poor rural communities, children should be provided with free textbooks and that particular attention be paid to improving teaching in small one-room schools. COVERAGE 3.5 In China today, about one in every five persons is participating in some form of schooling. Of the estimated population of 1.1 billion in 1988, 201.8 million (16.4Z of the total population) were in the formal school system of primary, secondary and higher education. There were, in addition, 18.5 million children (2Z of the total) in kindergartens or pre-school classes. There were 30 million adults (2.7X of the total) in various classes with 16.1 million in primary school courses and 2.0 million in literacy classes. 3.6 A comparison with the figures for 1949 indicates not only the vastness of the educational undertaking in China today, but also the considerable achievements since Liberation. At that time, one in every 18 people participated in school. Of the total population of 541.6 million, there were only 25.7 million (4.7Z) in schools. - 19 - Table 8.1: TOTAL ENROLLMENT IN 198 ot X of Full ti.o Stu/Tch Enrollment Type of School Enroll ment Female T.Popul Teacher. Rntio In 1949 Pre-school Clsses 1,6 45,80 MA 2a 670,400 2S Prtmry Schools 126,857,000 40X l1X 5,601,800 28 Junior Secondary Schools 40,165,400 413 43 2,402,700 17 Senior Secondary School 7,469,600 fr 1X 656,900 18 Normal Schools 568,500 453 0.13 57,600 12 Technical Schools 1,866,200 Lb O.1X 107,700 6 Voc/Agri Schools 2,98,700 44X 0.83X 202,800 14 Skilled Worker Schools 1,160,800 MA O.1X 124,900 9 Special Educstion Schools 17600 NA OOX 10,800 S Univeresti,es 4,282,600 16X 0.43 898,200 11 Sub-totlI 201,814,700 83X 18.4% 10,088,200 20 25.7 Adult Primary School. 18,095,100 "A 1.65 69,00 /e 281 mndl. Literacy Cl.s.. 2,080,000 NA 0.23 11,800 Z6 180 Adult Secondary Schools 12,811,100 NA 1.13 209,400 s 59 Adult Univorsitle 1,727,600 NA 0.2X 8,800 21 Sub-total 80,188,800 NA 2.73 868,000 88 18.2 Total Students 281,948,500 NA 21.2X 10,451,200 22 86.9 Total Populotion 1,006,140,000 43X 541.0 Source: Statistical Yearbook of Chinese Education, 1988; China Statistical Yearbook, 1989. Note: * University students Include both graduate and undergraduate student. a The percentagi ta gregated In the junior secondary schools. The percentage to aggregted In the normal schools. F Full time teachers only. (A. a result, the student/teacher ratio ts exceptionally high. 3.7 'When compared with other countries, China's coverage in primary education is high, coverage in secondary education is about average as seen in Table 3.2. In higher education however, the enrollment rate is one of the lowest in Asia (1.72) and only one-fifth as high as the regional average (9.82). Table 3.4: ENROLLMENT RATES BY LEVEL IN CHINA, ASIA COUNTRIES AND WORLD REGIONS, 1985 Primary Secondary Higher 2 2 Z China 118 39 1.7 India 92 41 9.0 Indonesia 118 42 6.5 Korea 96 75 31.6 Malaysia 99 53 6.0 Asia 92 39 9.8 Developing countries 90 37 9.5 - 20 - STRUCTURE 3.8 Structure. The Chinese education system consists of both formal education and non-formalladult education. The formal school system consists of pre-school, primary, secondary and higher education, with both secondary and higher education having a dual system of general and vocational sectors. Pre-School Education 3.9 Enrollment in Pre-schools. Numbers reached an all time high of almost 30 million by 1960, followed by a huge decline during the Cultural Revolution (Table 3.3). The 1980's saw a steady increase to 18 million. The average enrollment rate for all 3 to 6 year olds is 24Z, but it varies between^ urban and rural areas. In 1988, rural enrollments were only 18?, while urban enrollments were 55?; more than half of all urban 5 and 6 year olds were enrolled in pre-schools. Table 8.8: PRE-SOOL EDUCATION: SCHOOLS, EILUMWS, TECHERS, 1950-1988 Y"r Schools Enrollmte U X All Teacher U X Female Minority staff Female Minority 1ogo 1,799 140,000 2,200 1,700 1050 784,905 29,81,000 1,$84,000 1,840,400 1980 170,419 11,08,000 610,000 411,000 e2 2 1964 198,528 12,947,000 48 1 787,000 491,000 94 a 1985 172,262 14,797,000 4? 2 798,000 527,200 9B 8 198 178,876 10,269,827 47 8 680,90 604,988 96 8 1987 176,5 1S8,076,400 47 8 941,08 61,892 9e 8 1965 171,645 18,J4l,800 4? 8 979,107 670,88 96 8 Sources Achevemet of Education to China: Statistics, 1949-198X, 1980-1906. EducatIon statistics: 1966, 1987, 1968. 3.10 Structure of Pre-school. Pre-school education includes 3-year kin- dergartens in urban areas and 1 year pre-school classes attached to primary schools in rural areas. The majority of pre-school children are in community- run (minban) schools (64?), only 18? in schools organized and financed by Education departments, and 18? in schools run by other departments. There are a number of problems associated with pre-school education, including wide dis- parities between urban and rural areas in both the level and quality of provi- sion. Primary Education 3.11 Access and Efficiency Indicators. Major gains in literacy rates over the past four decades have been accomplished through the near- universalization of primary schooling. As the total population has almost doubled, from 541 million in 1949 to 1.8 blllion in 1988, the primary school population has increased by 433?, from 24 million pupils to 126 million. Figure STRUCTURE OF THE EDUCATION SYSTEM FORMAL NON- FORMAL EDUCATIONI EDUCATION PRE- PRIMAR SECON- HIGHER ITERACY PRIMAR 8ECN- HIGHER SCHOOL DARY _ CLASS DARY ~UN1011 ENIOR 1 1 L,> gw*e on/Se,. [0X, 1 n/.S g--.*;.e l I l. I p Ioly te I l voetlion*i Figure 3.2 STRUCTURE. OF THE FORMAL EDUCATION SYSTEM :)... PRIMARY SEQQN . . ._ER Urban Area 1 2 3 1 2 3 4 5 6 1 2 3 1 2 3 1 2 -3 4 5 1---+---+----l ---+---+-----------------1 I-Junior-l l-senlor-l 1---+---+--------- general Secondary Universiltes Specialized Secondary 8 Colleges I---4---4---- I-normal-I I------+-----I I-vocXteo-l Vocational Rural Area Colleges I_11__---------------I I-----------I I-agr/voo-1 1 2 3 4 5 1 2 3 4 1 2 3 Special Education I------+---+-------------- I-mostly voatlonal-I 1 2 3 4 5 6 1 2 3 1 2 3 - 23 - Fiture 3,3 PRTIMRY SCHOOL INDICATORS USED IN CHINA 1. The Enrollment rate measures net enrollment (NER), that is the percentage of the appropriate age group which is in schools Net those in the age group who are in schools Enrollment -_x 1002 Rate population of schooling age group 2. The Retention rate, also known as the annual consolidation ratio, measures grossly, how many of the students who are in the school at the beginning of the school year remain at the end of the school year: number of pupils at the end of Retention = the same school year Rate x 100 number of pupils at the beginning of the school year 3. The Popularization rate is a monitoring indicator to measure the education attainment at the ages immediately after graduation. Two years are usually allowed for this measurement, that is, those at ages 12-15 who are primary graduates Populariza- - x 100l tion Rate population at ages 12-15 4. The Graduation rate is the percentage of primary pupils who graduate in that school year: number of P6(P5) pupils who graduate Graduation - s lOO1 Rate number of P6(P5) pupils . 24 - Figure 3.3 CONT'D INDICATORS NOT USED IN CHINA number of students in school Gross Enrollment Rate - ---------------------------------- s 1001 number of school age children in population number of students who are admitted to grade Ox* + 1 in year Y+1 Promotion Rate 3 x 1OO number of students in grade x in year Y number of students in grade xz' who were enrolled in grade x the previous year Repetition Rate … ---------------------------------- s 1001 number of students in grade *z' Competition Rate - proportion of students who start grade 1 and complete grade 5 in 5 years Tabl- 8.4: PRIMARY SOOML DICATORS iou lS80 9aiM 1907 ]LOW 18 i.7 mm am Enrollme rate 69 051 en 99 989 99 0 07 1? Retentionra' 691 o6X 6 MA MA MA 07 S *A Repetitlon rate 41 4X 1 NMA MA NA NA NI NA Orop-out rate 5X Ox 101 MA 2.0 2.0 NA NA NA Graduation rate 7x on 051 96 95 07 NA NA NA Transition rate 48X 67X 9X 78 78 88 N NA "A (graduates who enter secondary school) - 25 - 3.12 The State Education CoQdission uses four basic indicators to measure the degree of universalization of primary education: enrollment rate, reten- tion rate, popularization rate and graduation rate. (See Figure 3.3 for definitions of these rates.) These indicators are used throughout China to monitor improvements. The indicators are well defined, but they do not allow for measures of repetition or year to year drop-outs, and thus, do not adequately show how efficient the system is. Data on drop-out and repetition are not collected regularly and are used neither for comparison nor for cohort-analysis. There are a number of indicators used to measure repetition and drop out in other countries that would provide a more reliable indication of the efficiency of primary education in China. They are defined in Figure 3.3 and are discussed in more detail below. 3.13 Shortcomings of the four indicators used in China can be seen by analyzing the situation in Guizhou and Shaanxi shown in Table 3.4. In Guizhou, the consolidation rate of 932 means that 932 of the children who enroll in school at the beginning of the school year are still in the same school at the end of the year. It does not show that about 302 of the children do enroll, and maintain their enrollment, but do not attend classes. A high graduation ratio of 952 shows that of all children in the 5th year of primary school, 952 pass the graduation exam. It does not show that only about 50Z of those who start school in 1st grade reach the 5th grade. 3.14 Enrollment. Primary school enrollment shown in Table 3.3, rose from 24 million in 1949 to 94 million in 1960, and by 1980 there were 146 million in 917,316 schools. Since 1980, there has been a decline in the number of pupils due to the decline in the birth rate, however, there has not been a similar decline in the number of teachers. This has resulted in a drop in the pupil-to-teacher ratio from 27:1 to less than 23:1. The net enrollment rate rose from 49Z in 1949 to 932 in 1980 and reached 972 in 1988, according to official statistics (see Table 3.5). This high rate may be accounted for by an under-estimation of population growth, the way in which ei'rollments are reported, e.g. all children "enrolled on first day of school, and/or selective counting of the total number of school age children. The enrollment rates vary between provinces (Annex 1.2). - 26 - Table 5.6: PRIMARY SCHOOLS, ENROLLMENTS, STAFF# TEACHERS, 1949-1I8 I I All I I Year Schools Enrollments Femle, Minority Staff Teachers Fmeale Minority 1949 34,769 24,391,000 849,000 83,600 1960 M26,404 937*1,000 39 6 2,661,000 2,6093,000 28 1980 917,316 148,270,000 45 5 6,064,000 5,877,000 8s 6 1964 663,740 181,671,000 44 7 6,030,00 6,506,0W0 88 7 1985 832,309 183,102,000 46 7 6,021,000 5,499,000 89 7 19S6 820,840 131,625,000 45 8 0,064,697- 6,416,000 40 8 1987 607,406 128,368,600 48 8 6,064,700 5,488,800 41 8 1988 793,261 126,367,611 48 9 6,142,398 6,601,800 42 8 Source: Achievement of Education In China: Statistice, 1949-1903, 1980-1985. Education Statistics: 1988, 1987, 1988. 3.15 Most primary schools in urban and industrialized areas have 6 grades but in many provinces the majority have only 5 grades. Many rural schools are incomplete, having less than the designated 5 or 6 grades, and with children of different grades being taught together in multigrade classes. 3.16 Universalization. In 1983, the Ministry of Education specified the criteria for a county to be recognized as having achieved universal primary education: (a) the enrollment rate exceeding 95?; (b) the yearly retention rate exceeding 972; (c) the graduation rate exceeding 95Z, 90? and 802 in urban, advanced rural and other rural areas respectively; and (d) the popularization ratio among the 12-15 year olds exceeding 95?. Today these criteria are still used as the basis for measuring the universalization of primary education. By the end of 1988, 1,326 counties, 672 of the total, were certified as having achieved universal primary education. 3.17 Access and Equity Issues. During 1960-1986, the percentage of girls and women teachers in the schools increased from 39? to 46? of the pupils, and from 282 to 42? of the teachers. There has been a similar increase in the percentage of minority pupils and teachers in the schools. The relatively small numbers of school age children who are not yet in the system are mostly girls; 702 of the 3 million school age children not in school in 1986 were girls, mostly from rural and remote mountainous areas, and from minority groups. The persistence of disparities in the enrollment and participation rates between boys and girls and between urban and rural areas, means that universal primary education is still far from being achieved in China. - 27 - 3.18 Efficiency Issues. Repetition rates are seldom reported in Chinese statistics. Nor has there been any estimation by SEdC on a national basis. Using the student cohort analysis (matrices of grade and age over time), the World Bank mission estimated the following rates (Tables 3.6, 3.7). Table 3.6: REPETITION RATE OF PRIMARY SCHOOLS BY GRADE (estimated) Grade 1986 (2) 1987 (2) 1 36 39.6 2 27 31.8 3 24 29.5 4 22 27.0 5 16 21.9 6 n/a 30.6 Source: World Bank estimates using SEdC enrollment data and model by Ernesto Scheiffelbein Table 3.7: REPETITION RATE OF PRIMARY SCHOOLS BY YEAR (estimated) Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 Primary 332 312 322 322 342 332 332 302 302 Source: World Bank estimates using SEdC enrollment data and model by Ernesto Scheiffelbein.11 These are national data, including urban and rural areas. Repetition in urban areas is small (less than IO), but repetition in rural areas poses a very serious problem, which has so far been neglected. 3.19 It is not easy to determir.e the permanent and temporary drop-out rate, given the difficulties of the high official net enrollment rate; however, permanent drop-out was estimated by the World Bank at about 352 for the 5 grade system in 1979-83, which would seem to confirm the suggestion that 9 out of 10 children start primary schooling, 6 complete it, but only 3 1/ The models are described in detail in E. Scheiffelbein, 'Repetition Rates: The Key Issue in South American Primary Education, The World Bank, LATHR Division, November 1988. - 28 - graduate with good performance.21 Temporary drop-out is very serious. About 352 of the first graders stop coming to school during the school year and register in the same grade the following year, but do not attend. 3.20 There are suggestions that the temporary drop-out rate is increasing, since some families are unwilling or unable to pay the increased tuition fees and education levies. Further, the opportunity costs of child and teenage labor are increasing with the financial incentives that have been created by the economic reforms.3/ 3.21 There is now recognition of the seriousness of the situation. In 1988 alone, 7.15 million children had permanently dropped out of school, 3.3Z of all primary school pupils, and 6.91 of junior secondary school students. Economic factors explain much of this drop out, particularly in rural areas. Even in urban areas there are suggestions that education may be increasingly regarded as 'useless" since manual laborers have higher incomes than white collar workers. Furthermore, the drop-out problem also be attributed to factors such as the outdated textbooks, lack of bilingual education, overcrowded rural schools and dilapidated school buildings. No solutions have been found. Punishment for those who infringe the laws on child employment have been proposed.4/ 3.22 Graduation from primary school is not automatic. In 1987, only 96Z (19.1 million) of the graduating class (20.1 million) obtained a satisfactory pass in the final provincial level examinations. In these exams, the urban areas with 6 year schools have higher graduation rates (97+2) while rural and especially minority areas such as Qinghai (89X) and Tibet (76Z) have markedly lower graduation rates. Secondary Education 3.23 Junior Secondary School. There are two levels of secondary general education in China, junior secondary and senior secondary. Most junior secondary schools run three-year courses. A few junior secondary schools 2/ [China: Issues and Prospects in Education, The World Bank, 1985, Appendix B, Table 1.1 and P.6]. 31 [See, e.g. numerous reports of surveys, including those conducted by the State Statistical Bureau, commented upon in the press in articles such as "Rise in school dropouts', China Daily, 17 March 1988; 'Education must not be ignored', China Daily 24 May 1988; 'More rural children miss out on school', China Daily, 15 June 1988; 'Children work because it pays", China Daily, 25 June 1988]. 4/ ['Halt call on school dropouts', China Daily, 17 February 1989]. Shaanxi province has already introduced regulations to fine parents (from 30 to 100 Yuan per year of schooling missed) and firms who employ children (from 500 to 5,000 Yuan) ['Fine power rules seek to keep children at school, China Daily, 14 February 1989]. - 29 - op*rate an additional year for vocational training, and the numbers are growing. There are also a few specialized vocational schools at junior secondary level, but their numbers are declining. 3.24 Schools and Enrollment. The number of junior secondary schools and students have fluctuated a great deal since 1949 (Table 3.8). During the Cultural Revolution there was a movement to establish junior secondary schools La every town and village, and enrollment increased to 45 million students in 1980. Three years later, enrollment dropped to 39 million. In 1988 it rose again, to 42 million students, of whom about 401 were women. Table 8.8: JUNIOR SECONDARY SCHOS, EOLLMUENS, ISACHERS, 1949-1988 Year schele Enreol l1mte I I X leheh. I X Fgml- Minority Fele MIn 1949 832,000 53,000 1960 0,586,000 34,000 low 671,077 45,838,000 40 2,449,000 1964 75,557 35,843,000 40 2,097,000 29 low 75,00 39,645,000 40 2,160,000 29 1A6 ?5,55s 41,105,000 "A 6 2,219,310 NA 6 la6 75,927 42,620,000 40 2,326,527 I6" 74,066 40,156,355 41 2,402,742 31 $Wurce: Achievement of Education In Chino: Statistics, 1949-1988, 1080-1986. Education Stntietics 1986, 1907, 195,. 3.25 Transition and Promotion. The transition from primary to junior, and junior to senior secondary schools is based on examination. There is a great variety of exams across the country and different criteria apply to different subjects. In 1988, 70.4Z of the primary school graduates passed the exams to continue their studies in junior secondary schools (Table 3.9). In the sme year, the promotion ratio from junior to senior secondary education ,ws 38.01, as shown in Table 3.10. There has been a general decline in the ratio, due to the closure of some small secondary schools and the merging of others after the cultural revolution. - 30 - Table 3.9: PRIMARY-JUNIOR SECONDARY PROMOTION RATIOS 1965 82.5 1980 75.9 1985 68.4 1986 69.5 1987 69.1 1988 70.4 Source: China's Education Statistics Yearbook, 1987:19; 1988:21] Table 3.10: PROMOTION FROM JUNIOR TO SENIOR SECONDARY EDUCATION 1965 70.0O 1980 45.92 1985 41.72 1986 40.62 1987 39.1? 1988 38.0? Source: China's Education Statistics Yearbook, 1987sl9; 1988:21 Vocational Education 3.26 Vocational and technical education are provided at the secondary school level in three kinds of schools: (a) secondary technical schools (STS) -whith enroll about 1.1 million students; (b) skilled worker schools (SUS) which enroll about 700 thousand students and (c) secondary vocational schools which enroll about 2.7 million students. 3.27 The STS are managed and financed by SEdC and by technical ministries (i.e., Ministry of Energy, Ministry of Agriculture). Day to day management is usually done by technical bureaus and state owned enterprises, thus they have close ties to industry. Specialties offered are narrow and when graduates are not employed by the enterprise that supports their training, they have few placement options. Also, they have litt'c flexibility to move between jobs. 3.28 SWS are under the Ministry of Labor and Personnel (MOLP). About 602 of their resources come from enterprises. They have close linkages with employers and generally, students have substantial practice in industry before graduation. Graduates are guaranteed assignment upon graduation. The program produces competent workers, but like STS, graduates are narrowly specialized. 3.29 SVS, under the administration of Education Buz.aus at the Provincial Level, have less formal linkages with employers. Their role is to keep graduates from competing for limited university places and prepare them for - 31 - employment. However, because most entry-level jobs require little training, they seem to be performing a job that is not presently needed in China. For entry-level jobs, employers seem to prefer graduates of general education courses because of their higher level of 'trainability on the job* and because of their greater flexibility when job changes are required. 3.30 Annex 3.5 contains a detailed description of vocational and techrnical schools. It draws attention to three aspects of the present vocational system: (a) China provides vocational training to 502 of students in contrast to most countries where only 10-151 of the urban middle level labor force requires specialized pre-employment training; (b) apprenticeship, a preferred and more cost effective mode of pre-employment training in most occupations is ignored by policymakers in China and (c) resources are taken away from general basic education to finance vocational education. This may be counter-productive because good basic education is the foundation for further education and training. It is recommended that more emphasis be given to strengthening general secondary education. It gives graduates more labor market flexibility than narrow vocational training and provides a necessary basis for the specialized training and hMring from experience after employment. 3.31 The Sector Report on Technic I/Vocational Education for China's Development (August 7, 1987) indicate. that benefits of training are hampered by the exiscing labor assignment system, the narrow wage differentials, the present structure of rewards and low efficiency in the utilization of trained manpower. As a result, the external efficiency of the training system is very low. Also, there are serious problems in the use of existing resources, as demonstrated by the low internal efficiency of vocational schools. Specifically teachers, equipment and facilities are under-utilized. Student/teacher ratios are low, non-teaching staff represent 50 of total staff, schools are small in size and there is a proliferation of unrelated specialties within individual schools. 3.32 The basic recommendation is that Chinese policymakers look at experiences of vocational education in other countries, before proceeding with expansionary plans. In addition, the efficiency of training institutions needs to be evaluated. Tracer studies would provide indications on the extent to which the training provided is used on the job. Longitudinal studies would allow follow up of a cohort to see how their skills are developed on the job. These studies are explained in Annex 3.6. It should be noted that in SWS's (skill worker schools) linkages with industries are very strong. A sensible policy could be to increase the number of SWS's while reducing SVS's (vocational schools attached to the education bureaus). Higher Education 3.33 Structure. The system of higher education in China is comparatively simple. There are principally two types of courses: a four-year program which normally leads to a bachelor's degree, and a three-year-course leading to a diploma. Recently, with World Bank support, polytechnic universities began - 32 - offering two years of higher education for specialized technical areas. There is also a system of television universities by which adults can follow university courses on a part-time basis. 3.34 The higher education system in China almost completely collapsed during the Cultural Revolution. The conventional universities were repudiated as inappropriate and were virtually suspended. Established in their place were the 'July 21' Workers' Universities which were managed by factories and courses were taught by workers. By the end of the Cultural Revolution in 1976, there were 33,374 such 'July 21' Worker's Universities, but, gradually, these universities disappeared or were subsumed under the category of Worker's Colleges as a mode of adult higher education. 3.35 The early 19809 saw the reconstruction of the formal higher education system. Most of the universities which had existed before the Cultural Revolution were revitalized. This was soon followed by a rapid expansion in the number of inastitutions, very much prompted by the economic reform and relaxation in labor policies. Enrollment increased sharply from 600 thousand students in 1976 to 2.1 million in 1990. The number of universities expanded from 633 in 1979 to 1,075 in 1990. This very fast growth led to problems of efficiency, since most of these new institutions have very few numbers of students and are usually over-staffed and poorly- equipped. Higher education is examined in detail in Chapter VI. Table 3.11 below shows the growth in numbers of universities while Table 3.12 indicates their affilitation. Table 3.11s NUNBER OF HIGHER EDUCATION INSTITUTIONS, 1979-1985 Year No of Higher Education institutions 1979 633 1980 675 1981 704 1982 715 1983 805 1984 901 1985 1,075 3.36 In 1990 China has 1,075 universities and colleges among which 49 are comprehensive universities. All others are specialized colleges including 281 engineering schools, 59 agriculture colleges, 11 forestry colleges, 119 medical colleges, 262 normal colleges, 14 language colleges, 80 colleges of finance and economics, 25 colleges of political science and law, 16 physical education academics, 30 art colleges, 119 short cycle universities and 10 special colleges of ethnic minorLties. - 33 - 3.37 Table 3.12 shows that 36 universities are directly administered and financed by the State Education Conmission. About 316 universities are administered and financed by other ministries of the central government such as Miristry of Agriculture, Metallurgical Industry etc. Each of these ministries has a department of education in charge of managing their own education institutions. Each Ministry is thus responsible for providing education to future employees who are promised jobs in the areas in whi9ch they are trained. About 723 universities and colleges are administered and financed by Provincial governments. Table 8.12s HIGHR EDUCATION NSTITUTIONS BY AFFLIATION, 1988 Affillation No. Enrol l ent Size * of Studont/Teacher Teachers Ratio SEdC sO 254,926 7,061 62,940 4.8/1 Othor Central 816 882,928 2,008 144,062 4.8/1 Ministry Provinces 728 1,146,074 1,688 198,187 C.8/1 Total 1,076 2,065,928 1,922 898,185 C.2/1 3.38 Main efficiency problems of higher education institutions are explained in Chapter VI. Briefly they includet (a) low student-staff ratios; (b) low rate of utilization of facilities; (c) high unit costs; (d) over- specialization of courses; (e) small size which leads to diseconomies of scale. In reaction to narrow specialization, there are, for example, 378 types of specialties in the engineering field. Students locked into these narrow specialties lack flexibility and adaptability to technology induced charges and labor market needs. Table 8.1: EDUCATION ATTAINMENT OF ADULTS IN CHINA, lRlJmfIEu Am wORLD REGIONS IN THE 1980'S Per Capita aNP U Avcr&&* "eere of echoolino USS - 1986) Literate met" Femles Ove ll China 278 09 8.1 8.8 6.0 India 269 48 NA NA NA Indonesia 470 74 4.9 4.8 4.8 Kora 2,040 92 9.6 7.8 8.4 Malaysia 1,800 74 8.6 4.9 6.7 Philippines 5o1 es 7.0 6.9 0.9 Sri Lanka 874 87 0.1 6.5 6.8 Thailand 712 91 4.6 8.8 4.2 Asia - 02 5.9 4.? c.a Afric - 98 8.6 2.6 8.1 Latin Amertei - o 6.7 6.4 6.6 Mid East-North Africa - 48 5.1 8.7 4.4 Source: Tan *nd Mingst (1989). - 34 - Literacy 3.39 Approximately 802 of the population was illiterate in 1949. This was reduced to 382 in 1964 and to 322 by 1982, largely through literacy classes and the near-universalization of primary schooling. Literacy classes are the responsibility of local government and are organized by factories, enterprises, peasants' and women's associations. In 1980, there were 513,308 classes for 12 million adults, but by 1987 numbers had fallen to 2.48 million adults in 37,765 classes (Table 3.12). Efforts to achieve literacy are focused on increasing enrollments in primary schools. 3.40 Compared with other countries and region of the world, China's achievement is good. In 1985, its literacy rate was 692, higher than for Asia as a whole. However, there continues to be a high literacy rate among women. According to the 1982 census only 552 of the women were literate. Males receive an average 6.1 years of education while females receive 3.8 years (Table 3.13). The corresponding numbers for Asia are 5.9 years for males and 4.7 years for females. Table 3.14: LITERACY CLASSES, ENROLLMENTS, TEACHERS, 1980-1987 Year Classes Enrollments Teachers Teachers (part-time) 1980 513,308 11,961,800 47,100 556,700 1983 141,308 5,287,500 27,300 225,000 1984 6,088,200 36,100 247,900 1985 176,076 5,189,800 42,600 204,600 1986 117,109 3,533,000 28,800 158,300 1987 37,765 2,478,394 17,326 105,483 Sourcet Achievement of Education in Chinat Statistics, 1949-1983, 1980-1985. Education Statistics: 1986, 1987. 3.41 Eguity Problems. There are great differences in the illiteracy rate within the country. According to the 1982 Census, it was only 152 in Beijing, but, it was over 45Z in six provinces: Anhui (462), Guizhou (482), Yunnan (492), Tibet (732), Gansu (482), and Qinghai (47?) (Annex 9). In these six provinces which have above average rural and/or minority population. more than half of the women were illiterate. In China as a whole, the-) .re still more than twice as many illiterate women as there are men. This is a clear indication that more girls drop out or school then boys. Due to the way statistics are processed, this issue does not show up in the published statistics books. 3.42 The illiteracy rate for minority groups is also considerably higher than that for the population as a whole. Although only about 52 of the Chinese population is considered minority, literacy among the minorities is about 422, and thus in total, about 30 million minority Chinese are illiterate. _ 35 - Table 3.15: ILLITERACY RATES, BY SEX, ',OCATION AND MINORITY (1982 Census) Men 192 Women 452 Urban 152 Rural 482 Minority Groups 422 Men 301 women 562 Total Population (12 years and over) 745.9 million Total Illiterates or semi-literates 237.7 million 322 Sources 1982 Population Census. Table 3.16. ILLITERACY RATES, BY SEX AND AGE GROUPS (1982 Census) Age Male Female Average I I I 12 years 5.3 14.1 9.6 15-19 years 4.2 14.7 9.4 20-24 years 5.7 23.3 14.3 25-29 years 30-34 years 13.2 40.3 26.2 35-39 years 40-44 years 22.4 57.4 38.7 45-49 years 32.2 74.5 52.1 50-54 years 40.6 85.2 61.7 55-59 years 60 years and over 60.9 95.4 79.4 Sources 1982 Population Census. - 36 - 3.43 The State Council has recently called for a nationwide campaign to reduce illiteracy and has set the minimum number of characters an agricultural workeripeasant should know at 1500. while industrial workers and urban residents should be able to read and write 2,000 characters and keep simple accounts. Targets set by the Council are 851 of the rural and 902 of the urban 15 to 40 year old population be literate by 1995 (China Daily, 25 February 1988]. There is a need, not ye,: addressed, for special measures to be taken to reduce illiteracy among women. Administrative Structure 3.44 The Governmental Structure. In 1989, there were 30 provinces (including municipalities and ethnic autonomous regions) in China. The basic administrative sub-units in provinces are counties. There were over 2,000 counties in the nation in 1989, but the exact number changes from time to time because of continuous re-definition of borders. The average county has a population of around 500,000. Towns or townships are further subdivisions of counties. Townships were formerly communes started in the late 1950's during the "Great Leap Forward' but were dismantled after the Cultural Revolution. The population of a township varies from a few thousand to a few tens of thousands. Most urbanized townships are called towns (Figure 3.4). 3.45 The Administrative Structure of Education. TLe provincial authority for education used to be called the Education Department. Since the establishment of State Education Commission in the central government in 1985, many provinces see the advantage of the model and have established Provincial Education Commissions. The Commission is both a policy-making body and an executive government organ. The policy-making component typically comprises representatives from the economic, planning, statistics, birth planning, labor and personnel departments. It is usually headed by a Deputy Governor who is in charge of education. The original Director of the Education Department heads the executive arm, with all the sub-departmental divisions corresponding to the sub-structure of the State Education Commission. 3.46 Education authorities below the provincial level are usually called bureaus. Hence, there are county education bureaus, and, in a few cases, prefecture education bureaus. Below the county level, in the township, education is often managed by one or two specialists in the township government, called the Education Manager (Jiaoyu zhuangan). In the rural setting, the primary schools in a township cluster around a center school. The principal of the center school is often also the Education Manager. Figure 3.4 ADMINISTRATIVE STRUCTURE | Provincel . r Municipalities 1Prefectures Cl ty Urban ˘l leasi Non-Urban Proper Counties at County L counties Town J Dirtrl Town - 38 - Flaurs 8.6: RESPONSIBIUTIES OF EDUCATION BUREAUS Province Prefecture or County or Townships or Villoge Municipality city districts Community Education Education Educatlon Eduetlon Education Villeg. Authority Commission Burau Sureaus with Spectialit Education odueatton reporting to Sp ecilist bur au director local Covernment authorities Maln respon- (a) Allo ate (at Colect (a) Manage and (a) Mnag (a) Encoure sibititles funds that coe statistics education fund. education funds school from central for primary and colleted at participation Governrent secondry township or schools district levol. (b) Ro ulates (b) Administer (b) Recruit and (b) Prepare (b) Monitor number of funds for pay teachers education schools teachers training of statistics teachers In the "orml sichools (c) Determines (c) Prepar (a) Build (e) Monitor (c) Recruit aln- teacher ploan for schools schools ban teachers and subsidis dIstribution of supervise them. tooks (d) Coordinates (d) Prepare and (d) Conduct In- (c) Organize printing and grade secondary service collection of distribution of school entrance training of funds book exams teachers (s) Approve () Administer the curriculum 4th grde *xaz for the to al pmeary province chool chhIdren (f) Runs provincial univeritles - 39 - Teachers and Teacher's Workload 3.47 Teachers and other staff are the responsibility of provincial and local government education departments, other non-education departments and the community. In 1988, there were over 5.5 million full time teachers, (89a of the total teachers and staff of 6,142,398). 422 of them were women and 8? were from minority groups. More than half of them were employed by the community, about 43t by Education departments and 62 by non-Education departments (Annex 1.2). 3.48 The standard set by the State Education Commission for the number of pupils per teacher seems to be generous by international standards, and results in very low pupil-teacher ratios. The average is 23sl, but in Beijing, Tianjin, Shaanxi, Inner Mongolia, Shanghai and Tibet it is between 16 and 18 to 1 (Annex 1.2). Statistics show that Chinese teachers at the secondary level have only 12 class hours a week and an average pupil-teacher ratio of 17X1. As a result, Chinese teachers seem to have a lighter workload compared with their counterparts in most other countries. However, these statistics may be misleading, since they do not take account of the fact that despite low pupil-teacher ratios, many classrooms are overcrowded with 60 to 70 pupils. The statistics of class hours take no account of the time used for preparing lessons, correcting homework, counseling, visiting students' families, organizing after class activities or time for their own political studies and professional improvement, all of which are part of the duty of Chinese teachers. Table 3.16 shows workloads as reported by teachers surveyed in Guizhou and Shaanxi. These reports coincide with observations made by Chinese scholars and administrators who report that teachers in China are busy grading students" work, tutoring low achievers, visiting parents and grading examinations. It seems that a special study on the workload of secondary school teachers could provide useful results for improving the efficiency of education. it should be possible to reallocate teacher's time so that classroom teaching takes up a larger proportion of their time. - 40 - Table 3 .16a: TEACHER'S WORKLOAD (PERSONAL WEELY RECORDS) AVERAGE HOURS PER WEEK Guizhou Shasani Average Range Average Range Classroom Teaching 17 7-30 14 5-29 Tutoring, Class Preparation and Home Visits 25 11-30 34 12-40 TrAnsportation 14 6-18 9 4-12 Housework 24 5-40 22 3-46 Total 80 79 Rotet Teachers were asked to fill a matrix showing days of the week and hour activities. These averages represents the matrixes filled by 68 teachers Jn Shaanxi and 40 Guizhou. 3.49 Information on workload of teachers is difficult to collect. Two instruments were used for this study: a personal weekly record and an Interview questionnaire. Results are very consistent: teachers report teaching 17 hours in Guizhou and 14 hours in Shaanxi (Table 3.16) with primary teachers working 22 hours in Guizhou and 16 in Shaanxi (Table 3.16b). Unfortunately no date is available to report rural versus urban differences. It is well known however that most urban teachers teach no more than 12 hours per week while their rural counterparts teach more than 25 hour per week. - 41 - Table 3.16bt TEACHER'S VORRLOAD BY LEVEL AVERAGE HOURS PER WEEK Guizhou Shaanzi Primary Secondary Primary Secondary Classroom Teaching 22 14 16 12 Tutoring, Class Preparation and Home Visits 26 22 32 36 Transportation 14 15 9 10 Total 62 51 57 58 Sources World Bank Mission Questionnaire, 1989. 3.50 Teacher Training. The pre-service training of teachers for kindergartens and primary schools is conducted in senior secondary level Normal Schools, administered by the province, prefecture or county. In most cases, the course lasts three years. There are also comuunity-run vocational courses for training pre-school and nursery school teachers and other staff. In-service teacher training for unqualified primary school teachers is through full-time attendance for two years at a Normal School, at a county-run Teachers' Training School, or through correspondence courses which now include a two year television course. Both Normal and Teachers' Training Schools run short courses on specific topics (Figure 3.6). 3.51 Pre-service training of junior secondary school teachers consists of two or three year courses at provincial and prefecture level Junior Normal Colleges. The in-service training of unqualified teachers is conducted at provincial and prefecture level Institutes of Education, whlch also have responsibility for the in-service training of senior secondary school teachers. Pre-service training of senior secondary teachers consists of four year courses at state, provincial and prefecture level Normal Universities or Normal College. - 42 - Piaure 3.6: STRUCTURE OF TEACHER TRAINING Pre-service In-service Primary school Normal school Teacher Training School Entry level Junior Second&ry nla Duration 2, 3, 4 years Lo variable Administration (Province, Pref., County) (county) Junior Secondary Junior Normal Col. Inst. of Education Entry level Senior Secondary 5 years of teaching exp Duration 2, 3 years 2, 3, 4 years Lb Administration (Province, Pref.) (Prov., City, Pref.) La 2 years training for a minban (co=unmity-run) school teacher 3 years for a gongban (public) school salaried & pensionable teacher 4 years for a master teacher lb 2 years for junior secondary, 3 or 4 years for senior secondary (diploma or degree) 3.52 In 1987, there were 1,059 Normal Schools for training primary and pre-primary school teachers. There were 651,262 students (30,478 training to be pre-school teachers), 50.32 of whom were female and 9.5Z were from minority groups. Although the percentage of primary school teachers who are women has increased to 40Z (and is likely to increase further with girls making up half of Normal School enrollments), the percentage of women teachers in Normal Schools is relatively low, only 31S. The student-teacher ratio of 12l in 1987 is more generous than that in most post-secondary institutions and universities in industrialized countries. TIbLe $.1?: NORMAL SCHOOLS, NROLLTS, TEAUCHRS, 1940-1967 Y"r Sheaole Enrol l1ent I % All Teachrs I X enale Milaority Staff FPale min 1040 0O 152,000 18,000 0,000 1#60 1,964 680,000 81 8 74,000 42,000 22 1060 1,017 462,000 25 9 75,00o 87,00 22 7 198 $0t 45,00oo 8? 6 60,000 40,000 25 7 1064 1,006 5C1,000 41 8 65,000 42,000 2t 7 1065 1,026 568,000 89 9 90,000 40,000 81 7 100 1,041 611,800 48 9 91,651 49,680 as 7 1907 1,059 051,262 50 10 102,800 5000 81 8 Source: Achievement of Educstion In China: Statistics, 1049-1908, 1980-106g. Education Statitlces: 10N, 1907. - 43 - 3.53 In addition to pre-service training, many of the Normal Schools have some responsibility for in-service training, either through short courses, two year full time courses or distance education, which, up until very recently, was through correspondence. There were also 2,099 Teacher Training Schools in 1987 devoted entirely to in-service training. Table 8.18: IN-SERVICE TACHER TRAININ (PRIMARY A SECONDARY), 1980-1907 Teacher Trainina Schools (Primary) Ing1;l of Etcstle! (Secondary) Y"r Schools Enrolliment Teachers Part-tim Institutes Enroll- Teachers Teschers mets 1980 2,698 1,531,200 11,600 27,200 1,260 42,0W 10,212 1683 2,101 980,600 25,200 10,200 304 08,861 l1,120 1984 1,782 608,000 25,800 4,600 218 168,7 17,165 1985 1,604 684,200 27,800 5,800 210 247,122 2o702 1988 2,072 774,092 84,152 5,672 202 259,6 23,601 1987 2,099 881,027 89,011 6,138 288 261,208 24,882 Source: Achievement of Education In Chins Statiestics, 1949-198t, 1980-1985. Education StatistIces: 980, 1087. 3.54 Figure 3.7 shows the decline in student teacher ratios. As population has dropped, no adjustments have been made in the size of the teacher training institutions and there is now an oversupply of teachers in the country as a whole. This is true for both primary and for secondary education. With the existing capacity for teacher training and the declining student population there will be about 3 million redundant teachers by the year 2000 (assuming a student teacher ratio of 20:1). 3.55 Rationalizing the training system is a pre-requisite for rationalizing the utilization of teachers in schools. One possible recommendation is to allow teacher training schools to offer other courses in addition to teacher training. By becoming comprehensive schools, they can respond better to labor market needs and make good use of their staff and facilities. The Minban Teachers 3.56 As mentioned in Chapter II, minban teachers are a unique issue in the development of education in China. Minban literally means 'privately sponsored', and the term is used to refer to those teachers who are not counted on the public pay roll and to distinguish them from gongban teachers who are employed and paid a full salary by the government. In 1988, 452 of primary school teachers in the whole nstion were minban. There are also minban teachers in junior secondary schools (15Z). The fact that the majority of rural schools are taught by minban teachers has made this a critical issue in educational planning in China. The issue is of particular importance to the two provinces under study, given the fact that they are predominantly rural. In Shaanxi, 95.02 of the primary school teachers are minban, in Guizhou, 43.12. Figure 3.7 Primary Pupil/Teacher Ratio Number of Pupil Per Teacher 40 30 - .... .. 2 5 . .. . . . .. ............ . .. _ .............. 2 0..6.. .. ... ......... .............. . ..... .. .. . . .............. ...... . .. ... 15 _ ~196C019566 960 1966 19701t97519801C 861986 1987 1988 |Pupil/Teaoher Ratio 20 33 36 30 29 29 27 25 24 24 23 - Pupil/Teacher Ratio - 45 - 3.57 Minban teachers are basically farmers (peasants). Many of them were recruited during the Cultural Revolution when there were unrealistic directives for dramatic expansion of primary and secondary education. The drastic explosion of the student population entailed corresponding dramatic increase in teachers. Many of the intellectual youths (mostly junior secondary graduates) who were sent to the rural areas were recruited to teach. They still retain their peasant status, which means they earn their living by the 'labor' of teaching, which in the past allowed them to receive their share of the commune's total output. After the Cultural Revolution, most minban teachers remained in their teaching posts, mainly because of the demand for education and the serious shortage of qualified teachers. Due to the reform of the comune system they no longer receive a share of the commune's output. New minban teachers have also been recruited in recent years to meet the increasing demand for education in the prospering rural economies. Such teachers are doing the job of normal government-sponsored (gongban) teachers. Yet, they are not paid the normal govern.ment teacher salaries and they are not in the government's payroll. In many areas, minban teachers play an important role. Very often, they form the most reliable part of the teaching force and many of them have been appointed school heads. The position of the minban teachers in the education system raises three issues: qualification, income and status. 3.58 Qualification. Most minban teachers have attended secondary school and have received further in-service training. Others, particularly the middle-aged, work on Professional Certificates and attempt to qualify themselves through private study. However, minban teachers, even when they obtain qualifications by training, might not be converted to gongban status. 3.59 Income. Minban teachers receive no salaries, only subsidies, which may come from national or provincial sources or local contributions. They supplement their income by selling crops from small plots of land given to them because of their farmer status. The level of income for minban teachers varies according to the local economic conditions and the provincial policies. In rich areas, minban teachers may get an income higher than that of a gongban teacher. This is not the case in Shaanxi and Guizhou. In some localities, minban teachers receive nothing in local contributions except a bare 45-yuan as subsidy (in Guizhou). In other localities, the local community contribu- tions provide only meals. In most cases income from subsidies is below the poverty line. 3.60 Status. Minban teachers are farmers by status. There are three main differences between minban and gongban teachers. First, minban teachers, are peasants, not cadres, i.e. they are not included in the manpower planning by the personnel departments/bureaus. Second, minban teachers are not entitled to the benefits available to normal government employees. Third, in moSt cases, their rural status deprives the minban teachers' children of any opportunity to live and study in the cities. S.61 The Policy. The policy on minban teachers is a paradoxical one. On the one hand, they play important roles in rural schools and are particularly essential in these days of universalizing basic education. On the other hand, - 46 - they are not given the opportunity to become a fully qualified part of the teaching force, and are less well rewarded than regular gongban teachers. The State Education Commission has made it clear that the minban teachers who were recruited after 1981 would not be officially recognized. This was a measure to facilitate placement in jobs of the graduates from normal schools. 3.62 Each year the national authority (the Personnel Ministry) is supposed to set a quota for the conversion of minban teachers to gongban status. Such a quota, from the point of view of the Personnel Ministry, is already a special concession to education, because generally the personnel policy prohibits the conversion of rural-registered population to urban- registered status. The quota limits the number of minban teachers for conversion, even if they have obtained formal qualifications. This policy serves as a disincentive for minban teachers to upgrade themselves, and also explains the large number of qualified minban teachers who have not yet acqui.ed gongban status. Only 200,000 teachers have been converted through this system, out of 1 million who are expecting to be converted to gongban status. 3.63 Another anomaly lies with the impossibility of filling gongban vacancies with minban teachers. The Personnel Departments argue that when gongban teachers leave their teaching posts for other occupations, they do not create a vacancy in the overall structure of government supported staff. This is further supported by the fact that over-staffing is common and the government policy is to reduce the number of posts. The transfer of a teacher to another occupation is, therefore, regarded by the Personnel authorities as helping to reduce the general over-staffing. Thus, the problem remains. There are many qualified minban teachers who are not given recognition, and those who are unqualified minban teachers are not given any incentive to become qualified. Curriculum and Teaching 3.64 The Curriculum and Teaching Materials Research Institute (CTMRI) was established in 1983 to: (a) conduct research in curriculum and teaching; (b) coordinate academic exchanges with other countries and (c) coordinate training and curriculum. The staff of CTMRI is also the staff of the People's Education Press (PEP). CTMRI staff are responsible for research while other PEP staff are more involved with textbook publishing. 3.65 CTMRI collaborates with the Central Institute of Education Research (CIER) and with colleges and universities to carry out research on curricular theory, textbook structure, learning theory and content organization. PEP publishes materials fors (a) primary and secondary schools; (b) pre-schools; (c) secondary normal schools; (d) pre-school teacher training schools; (e) normal universities and colleges; (f) secondary vocational schools; and (g) adult education. 3.66 The new basic education curriculum is the sixth to be used since liberation in 1949. Its development started in 1986 following the 1985 decision to reform education. It is now in draft stage and will be submitted for approval to the National Evaluation Committee for Primary and Secondary - 47 - School textbooks (NECPSST). This committee has 39 members and 16 subject committees with 112 members including senior scholars and editors. In keeping with the principles of the education reform, this new curriculum is to be characterized bys (a) updated knowledge which includes contemporary content matter and modern teaching methods; (b) employment training for those students who do not got to higher secondary schools; tc) opportunities to apply Knowledge to practical situations; and (d) development of thinking skills. 3.67 The curriculum development process is very well-established with basic research, writing, pilot trials, revisions and submissions for approval. Few textbooks are ready yet and no data is available on the number of new textbooks printed or the extent to which new books have reached the provinces. Two syllabuses and several series of textbook have been designed. One syllabus is for places which have 6-3 structure (6 primary and 3 secondary) and another one for rural areas with 5-4 structure (5 primary and 4 secondary). The Sichuan Education Commission and Southwest Normal University have developed one series for the 6-3 syllabus and textbooks. Guangdong Education Commission and South China Normal University have developed another series for 6-3 syllabus in coastal areas. A coordinated commission of eight other normal institutions including Shanghai, Beijing and Shaanxi have developed a third series. Also Hubei Province has developed a 5-4 series for rural areas. 3.68 Efforts are also being made to translate the textbooks to languages spoken in minority areas and to develop a special bilingual series. These books are being tested in Guizhou, Yunnan and other areas with high concentration of minority children. It is recommended that more attention be paid to the question of bilingual education, as a way of improving efficiency. 3.69 One area which continues to be weak is the teaching of science courses. The courses are abstract, theoretical and not related to daily life. Important topics related to modernization and adoption of new technology and technological concepts are covered in a very marginal way. Emphasis is given to abstract formulas and theoretical scientific concepts, with minimal attention to 'how things work.' Selection of adequate topics in the curriculum and provision of simple equipment to be used by the students themselves are prerequisites for good science teaching. Examinations 3.70 Primary Graduation Examination. Examinations for graduation from primary schooling is generally a county-level exercise. Examinations are managed by the Education Bureau and are separately administered in different schools. There is no central control of standard in this examination. Students who do not pass the graduation examination may sit for a supplementary examination which most students pass after some remedial teaching. The problem lies in the absence of mechanisms for comparisons among schools and counties and the lack of time series data. Because exams are not standardized, exam results cannot be used to improve teaching. 3.71 Selection for Junior Secondary. Unified examination papers are set by the county Bureau of Education. The actual examination is administered at - 48 - township level as a centralized public examination. Examination scripts are then marked by teachers selected by the sub-county district education authority. There are, however, no mechanisms in place to use examination results for improving teaching. Results are only used for selection purposes. 3.72 Selection for Senior eacondarE. This is a two stage selection process. The following description takes Chenggu county of Hanzhong Prefecture as an example. The first stage is a pre-selection examination and the second is the real entrance examination. The pre-selection examination is set by the prefecture authority administered by the Teaching-study office in the county Bureau of Education. The students are assigned in examination centers according to sub-county districts. Out of the 5,000 students who sit for the examination, only about 300 are selected for the actual entrance examination. However, the pre-selection examination is also used as a means to select students for the secondary technical schools. The examination for senior secondary entrance, taken by the pre-selected candidates, is a unified examination set by the provincial authority. Of the 300 candidates for the county, some 200 get places in senior secondary schools. The number of students who can pass the examination is dictated by the admissions plan laid down by the provincial authority. There are no national guidelines for these examinations and no standardized processes that would allow for comparisons among prefectures and provinces. Supervision 3.73 There is a national movement to revitalize the Inspectorate system which once functioned before the Cultural Revolution. The system, still under development, has started establishing a provincial Inspectorate which works independently under the leadership of the Provincial Government. The Chief Inspector is appointed by the Provincial Government, and there are 4 or 5 provincial Inspectors to be appointed by the provincial Education Department. It is empowered to inspect and evaluate all kinds of educational activities in the province, report to the Provincial Government and recommend revision or corrective measures. The Inspectorate is served by an office in the Education Department as its administrative arm. The whole idea of an Inspectorate is to supervise the process of education and to monitor the quality of education in the province. At sub-provincial levels, the prefectures and counties will respectively appoint Inspectors, with differing powers of supervision. At county level, an Inspector is to be elected from every 400-600 teachers. The ultimate goal is to establish a provincial network of Inspectors, which will form part of the national network. PLANNING The National Planning Exercise 3.74 A national comprehensive educational planning exercise was launched in 1986. This was preceded by the project, 'China 2000' carried out in 1983-85. China 2000 was a large-scale forecasting project which looked at all aspects of the national economy and arrived at different scenarios for China's economy in the year 2000. There were two prongs in the planning exercise: - 49 - basic education (i.e., primary and general secondary education) and technical and higher education. Both are described below. 3.75 A Planning Office or Manpower Planning Office was set up in each province. The Office was usually headed by the Deputy-Governor of the Province who was responsible for education. Members of the Office usually include representatives from other relevant departments the provincial Planning Committee, Committee on Economy, Committee for Birth Planning, the Labor and Personnel Department, as well as the Education Department. 3.76 Similar Offices were set up in the counties (and prefectures where they exist), with similar composition, headed by the Deputy Governors of the counties. Counties were the basic units of planning for basic education, although some provinces might choose to do finer planning and work on townships. General Methodology for Planning Primary and Secondary-Education 3.77 The planning of basic education aimed at the universalization of 9-year compulsory education. It started from demographic forecasting, estimated the likely scale of the school system, the number of teachers required and the necessary funding. The planning took into consideration the resources available and laid out the time-table for accomplishing 9-year compulsory education. The provincial plan typically consists of several phases during which a number of counties will achieve compulsory 9-year education by a particular target year. The county plan typically consists of similar phases for townships. The general methodology was based on four principles: "development according to conditions", multi-level interactions, piloting and validation. 3.78 Development according to conditions. This principle is concerned with feasibility, and seeks to avoid unrealistic targets by taking account of existing enrollments, the supply and quality of teachers, and physical facilities and funding. Hence, the principle reflects a 'supply-determined' philosophy in the planning of basic education. A typical plan looked at the existing enrollment at primary level, that is, the degree of universalization in primary education, and decided whether the county (or township) was ready to expand junior secondary education. It also assessed the qualifications of teachers, and the extent to which quality of the teaching force could be improved by teacher training, both in-service and pre-service. Finally, it took account of physical facilities, i.e., school buildings, classroom furniture and equipment for teaching. There was a national movement in the mid-1980s to eliminate 'dangerous' school buildings, and to ensure 'there should be no dangerous building in any school; there should be a classroom for every class and there should be a desk and chair for every child.' For equipment there are comprehensive standard lists of school equipment drawn up by the State Education Commission. There are three lists: Level I, Level II and Level III, corresponding to different levels of local financial capacity. (See Annexes). 3.79 Multi-level interactions. In a typical case, the provincial government initiated the planning through a preliminary conference, attended - 50 - by all county chiefs and the designated planners. This vas followed by training of the county planners. The training also served to set a uniform standard for indicators and their interpretation. The counties then came up with their local plans. Based on the county plans, the provincial Planning Office then worked out an integrated plan which was fed back to the counties for re-adjustment. Such an iterative exercise could be repeated two or three times before a plan acceptable to all levels was arrived at. At this stage, the plan was said to have reached "equilibrium". 3.80 During the integration, the major concerns of the provincial authority were teachers and funding, which involved provincial allocation, and the over-all feasibility of the plan at provincial and local levels. When the county planners drew up their plans, similar interactions occurred between the county planners and the township planners, until an equilibrium was reached. 3.81 Piloting. All planning started with a pilot exercise. At the national level, the provinces of Liaoning and Guizhou (representing rich and poor respectively) were selected pilots. The planning process in these two provinces was closely monitored by the national Planning Office in the State Education Commission. Planning in both provinces concluded with a national conference where other provincial planners were represented. 3.82 The provincial planning typically started with one county (or prefecture). Planners in all the counties were informed of the planning details of the pilot county. Very often, a provincial conference was held in the field where planners from all the counties participated. Discussions in the conference also served as training for other local planners. 3.83 Validation. There were two levels of validation. At the first level, the complete final draft of the plan was discussed and scrutinized by all parties involved, together with *experts, who were either familiar with planning or familiar with local conditions. Typically, a conference was held a month after the participants received the draft. If the draft passed the validation, then a revised draft would be sent to the local People's Congress. The People's Congress would further scrutinize and revise the plcn if necessary. The People's Congress would endorse the plan by formal legislation, hence, completing the entire process of legitimization. General Methodology for Planning Higher Education 3.84 While the planning of basic education is supply-determined, i.e., requirements are determined based on the number of children who will attend school, the planning of higher education is manpower demand-determined. 3.85 Provincial planning of Basic and Secondary education was a successful exercise, while planning of highLer education failed as explained below. The Provincial Planning Office carried out manpower surveys to estimate existing manpower stock. Forecasting was done by sample surveys in the essential industrial sectors and key-informant interviews in representative enterprises, so as to arrive at a range of possible scenarios of manpower requirements in the coming 15 years. Technical education (largely the secondary technical schools and skilled worker schools) and higher - 51 - education were planned accordingly. The starting point was a survey of high level manpower. secondly, a projection of high level manpower requirements was organized. This projection was based on enterprise-based eurveys complemented by simulations using rudimentary econometric models. Thirdly, the training requirements were t&aaslated into institutional enrollment quotas. By 1983, the results were being questioned and a Board of Evaluation was established. This Board came to the conclusion that the proposed requirements as well as the resource implications of the plan were unrealietic. To correct the problem, by 1985 a parallel survey and forecasting exercise was undertaken at the provincial level. Results proved to be equally unrealistic. 3.86 By 1986 the authorities realized that in China, as in other countries, manpower projections were out of line with reality. As a result, in late 1988, the Planning Office in the State Education Commission was merged with the Planning and Finance Department and lost its independence. The manpower-oriented planning of higher education virtually came to a halt. It is now recognized that changes in the labor market have to take place for manpower oriented planning to make sense. THE COSTS AND FINANCING OF EDUCATION 3.87 On average, Asian countries spend 3.3X of GNP on education, African countries - 4.1?, countries in the Middle East and North Africa - 5.3X and Latin American countries - 3.52. The Government of China allocates 2.62 of GNP to education. However, when budgeted and nonbudgeted expenditures are taken into account, China spends 3.32 of its GNP in education, an amount comparable to the average in Asian countries. Finacing Policies 3.88 The central government finances key universities and research. Provincial governments finance provincial universities, teacher training and selected key secondary schools. Counties and townships finance their own secondary and primary schools. Communities in rural areas are encouraged to collect funds to pay teachers and for school construction efforts. 3.89 The policy of the Ministry of Finance regarding the financing of primary and secondary education is to encourage collectives and local government structures to directly allocate resources for education so that central resources may be freed for other uses, mainly for higher education and research. Also, the Ministry tries to have as many sources of funds for education as possible. The main sources are: (a) central government appropriations for universities run by SEdC and for specialized schools; (b) provincial and local contributions; (c) appropriations by line ministries; - 52 - (d) school raised fundss (e) local contributions from individuals and communities; and (f) education levies. 3.90 The long term goal of the Government regarding education financing is gradually to increase overall expenditure for education. To meet this goal, the policy is that, at all levels of government, education budgets should grow more than total expenditure every year. Theoretically, this policy is followed throughout China at all levels of government and, therefore, education expenditure is not decreasing. If expeaditures for education decrease in a prefecture or province then the People's Congress will take the necessary measures. 3.91 In addition to the budgeted resources, schools are financed by locally collected levies which are not included in the budget. In urban areas the municipalities earmark 1 of production for education - (which is equivalent to 1Z of value added tax). In rural areas local authorities can determine the levies themselves. Often it is 3? of sales of products. The funds raised through levies are outside the government budget and outside the plan. They can be used to pay teacher salaries, build schools and provide other recurrent expenditures. 3.92 The schools are encouraged to raise their own revenues. This is a socialist principle based on the concept of education with production. Revenues from school factories are not taxed, thus school production can be attractive to local people. Revenues from factories are mainly used to improve the living conditions of teachers. 3.93 Regarding minority areas, the principle is that each one should "eat on their own stoves., However, in most cases they are subsidized by the central government. When minority areas prepare their budgets and the expenditures exceed the revenues, the difference is provided by either the provincial or the central government. The main program in minority areas is the literacy program for which village comuittees and enterprises are encouraged to participate and provide donations. There is also a rational program to upgrade school buildings in minority and rural areas. 3.94 As shown on Table 3.19, in China between 1950 and 1980, public expenditure on education was between 5 and 7Z of the national budget, while capital investment in education was about 22 of capital investment, with a high of 5.8S in 1952 and a low of 0.2S in 1970. Since 1980, public expenditure on education has increased to almost 10? of the national budget; howevet, the increase has slowed down, and is now below the level of the increase in state revenues and expenditure. At the same time, capital investment in education increased as a percentage of the total capital investment, from 2.5? in 1980 to 4.1? in 1985. - 53 - Tabl-e .19t EWP=DIIWE ON EDUCATJAN, 19S0-198S (100 mllIton tu nY) Publ c Expenditur Cpitol Investomnt amoeral geenoi ed a nl Ed Ed Total Totel enera l of educe- ma U Total Total Goner l ad as X of as of Year budget education ad tion total cap. Inv ad d education total 1900 08.1 8.S n.n. n.n. 5.C 11.8 0.8 0.1 46.8 2.0 1000 464.1 81.6 21.4 07.2 4.9 566.7 7.9 4.7 59.4 2.0 1000 1,212.7 94.2 76.1 79.7 7.0 600.9 14.0 5.0 as.9 2.6 1981 1,116.0 102.5 60.2 76.8 9.2 442.9 15.1 6.8 86.1 8.4 lo2 654.1 81.6 21.4 07.2 4.0 866.7 17.6 7.0 80.7 8.2 108 1S,292.6 127.9 100.4 78.5 9.9 04.1 24.1 0.9 80.9 4.1 1984 1,540.4 146.2 115.4 79. 0.6 748.1 81.6 12.1 88.4 4.8 1066 1,644.0 164.2 n.n. nn.e 10.0 1,074.8 48.0 17.1 89.2 4.1 1006 2,880.6 264.7f n.e. n.e. it.4Ab n.e. n.*. n.e. n.e. n.e. 1907 2,448.5 2moZj n.e. n.m. 11.2k[ na*. n.*. n.e. n.e. n.a. Figures from Deljlno Zhon?ouo Jisoyu Lo (China Education), March 21, 1909, p. 1. ib FPigeur Include both publIc eupeaditur end capital nvestmoent. Source: Achilvament of Education in China: stteti˘c. 1904961089 100010, Education Statistics: 1006. 3.95 Since education is financed largely by local level government, with about 952 of the costs of primary education in some areas provided by townships, villages and neighborhoods (equivalent to the former commnes, production brigades and peasants' associations), there are considerable differences in the resources available. Consequently, there are considerable differences in the ability of different areas to conform to the standards set by the central government (i.e., the State Education Comuission) in respect to the provision of buildings, the availability of textbooks and teaching aids, as well as the requirements for pupillteacher ratios and teacher qualifications. 3.96 Efforts to increase the diversification of school funding should be continued and there should be an increase in the amount of central and provincial budgetary flows for education in poor communities. Given that there will be an increase in the total resources for eduction (see para. 3.105), extra resources shc ld be carefully targeted to improve access and quality in low income areas, rather than to allow disparities between rural and urban schools to be even wider. - 54 - Table 8.20: EDUCATION EXPENDITURES Of CHINA (etIII oln Yu..u) 1970 160 1964 196 1989 1986 1968 421.00 047.20 680.60 9a8.00 1,092.00 Total government expondlture 111.10 121.27 164.64 164.46 288.06 244.86 200.08 Ebpendture on SIS-in labor 0.50 6.46 1.18 1.80 1.68 2.00 X Education-recurrent 0.50 9.42 14.82 16.42 21.48 22.67 27.18 Education total 7.02 11.82 16.00 22.44 20.60 27.40 Education as X of governrent .xpsaditur 0.60 9.88 11.04 12.10 11.87 11.22 Public budgoted education ** X of 9NP 2.69 2.76 2.70 2.62 2.51 (Goverment education budget as X of ONP) Nenbudgted funds 6.91 10.64 Tote I and nonbudgeted educatlon 81.85 87.04 Total ibge and nonbudgeted a j of ON 8.77 8.96 Sourcet Education funds and teaher selarles. The Unit Costs of Public Education 3.97 Table 3.21 shows the cost of education in China compared with that in other countries. China's unit costs are below the regional average for primary education, but they are substantially above it at the secondary and higher levels. As a result, the cost of education in China is higher than the cost in other Asian countries with an index of overall costliness of 108. 3.98 In nominal terms the unit cost of education has grown fast for all levels of education as shown in Table 3.22. In real terms, unit costs increased until 1986, when there was a decline at all levels. The average growth has been higher for secondary (10.42) and primary (9.02) than for higher education, where unit costs in real terms have fluctuated during the 19808. 3.99 Due to the high costs of higher and secondary education, China allocates about 222 of its resources to higher education, although it accounts for only 1? of total enrollment. It allocates 282 to secondary education, (262 of total enrollment) and only 282 to primary education, which accounts for 632 of total enrollment. - 55 - Table 3.21: UNIT COSTS O PUBLIC EDUCATION IN CHINA AND OTHER ASIAN COUNTRIES MID 1980s - US$ Unit Costs as X of Index of As Z of GNP Per CaDita Regional Average overall Primary Secondary Higher Primary Secondary Higher costliness China 7 23 199 68 122 134 108 India 6 17 231 61 94 155 103 Indonesia 13 23 91 128 126 61 105 Korea 17 23 71 167 127 47 114 Malaysia 19 21 190 143 115 128 129 Philippines 6 9 50 59 47 34 46 Thailand 16 15 40 157 83 27 89 Asia-Average 10 18 149 100 100 100 100 La Following a common practice, Tan and Mingat express unit costs as a percentage of the per-capita GNP to compare the costliness of education. Also, they compare the unit cost with the regional average and provide an index of overall costliness which is calculated as the average unit cost at the three levels. Source: Tan and Mingat (1989). - 56 - Table 3.22: UNIT COSTS OF EDUCATION IN CHINA (Yuan) in 1985 Yuan Year Higher Secondary Primary Higher Secondary Primry 1952 830.00 110.48 7.40 1,292.79 170.08 11.53 1965 917.68 88.89 19.96 1,189.07 115.18 25.86 1978 1,844.00 39.88 16.50 2,361.72 51.08 21.13 1980 1,752.38 60.13 23.19 2,075.82 71.23 27.47 1981 1,752.81 69.58 25.94 2,027.67 80.49 30.01 1982 1,922.43 85.95 30.93 2,182.42 97.57 35.11 1983 2,185.31 96.90 34.35 2,444.19 108.38 38.42 1984 2,228.59 107.62 38.58 2,424.71 117.09 41.98 1985 2,477.29 128.54 47.30 2,477.29 128.54 47.30 1986 2,564.10 134.90 48.30 2,418.96 127.26 45.57 1988 2,314.70 141.15 59.96 1,717.40 104.73 44.49 Annual growth rate (1980-1986) 1981 -2.32 13.02 9.22 1982 7.62 21.2Z 17.02 1983 12.0S 11.1Z 9.41 1984 -0.81 8.01 9.3Z 1985 2.22 9.8Z 12.72 1986 -2.4Z -1.OS -3.71 Average 2.71 10.41 9.01 Table 8.28: WDUOTED RECURctOE TION EXPENDITURES BY TYPE OF SCHOMLS ($IllMon Yuan) 19*4 ins Iwo 1987 Total X Totel X Total # Total edueation recurrent 14.82 100.00 10.42 100.00 21.46 100.00 Higoer education 8.27 22.10 4.02 21.80 4.09 21.90 Secondsar edu˘ tion 4.20 20.40 5.21 20.80 6.05 20.10 Prismry education 4.28 28.60 5.2 29.00 6.11 8.30 Subsidy for Uln Ban 0.97 6.A0 1.10 6.00 1.20 5.O0 Training - In *rvice 0.80 2.10 0.42 2.80 0.58 2.60 Others (WdUlt, *peciallzd, proechool, etc.) 12.20 18.00 18.80 Sources Eductlon tunds and teacher salaries. - 57 - Costs of Vocational Education 3.100 At the secondary level, there are striking differences between the Costs of general and vocational education. As a proportion of GNP per capita, the cost of one year of vocational education ranges between 182 in Qinghai to 1082 in Hunan with an average of 902 (Table 3.24) for China as a whole. This compares with only 232 of GNP per capita for general secondary education (Table 3.21). 3.101 Vocational education is financed by central, provincial and local governments. Rough calculations indicate that 142 of the revenue comes from central ministries, 542 from provincial and local governments; 272 from enterprises and 52 from school fees and school run factories. 3.102 Costs are higher than need be because of small school sizes, high teacherlstudent ratios and high rates of nonteaching staff. While savings could be realized from correcting these problems, they would still be insufficient to meet the very high standards for SEdC norms. Because these norms are so high, the cost implications of vocationalizing 502 of all secondary schools are very high. According to the study of vocational and technical education, 5/ the costs of vocational schools could absorb 1.42 of GNP while total expenditures for education are only 3.22 of GNP. This seems totally unrealistic. The policy of 50Z vocational education should be urgently reviewed, in the light of its cost implications. 5/ Technical/Vocation Education for China's Developmentt Sector Report, World Bank 1987. - 58 - Table 3.24, UNIT COSTS OF VOCATIONAL EDUCATION IN CHINA, 1988 (including agricultural education) (Yuan) Unit cost GNP Structure of Unit Cost (I) Unit Cost as Z GNP per capita Personnel Nonpersonnel per capita China 499.13 39.49 1,263.80 66.73 33.27 Beijing 799.25 21.98 3,635.52 63.87 36.13 Tianjing 989.37 33.10 2,989.32 62.70 37.30 Hebei 494.44 42.78 1,155.65 64.86 35.14 Shanxi 366.75 35.58 1,030.85 75.76 24.24 Inner Mongolia 342.61 31.47 1,088.83 75.76 24.24 Liaoning 570.10 28.10 2,028.80 58.33 41.47 Jilin 309.35 21.34 1,449.35 64.30 35.70 Beilongjiang 510.80 34.01 1,501.73 70.03 29.97 Shanghai 1,201.52 24.78 4,849.45 60.91 39.09 Jiangsu 546.84 33.50 1,632.49 69.01 30.99 Zhejiang 440.57 26.70 1,649.88 63.18 36.82 Anhui 332.17 38.06 872.79 67.81 31.19 Fujian 418.49 34.21 1,223.20 63.19 36.81 Jiangxi 304.36 34.33 886.67 64.38 35.62 Shandong 723.81 68.04 1,247.00 74.08 25.92 Henan 374.93 41.74 898.20 61.11 38.89 Hubei 386.62 32.60 1,186.11 63.09 36.91 Hunan 1,071.92 107.99 992.63 68.56 31.44 Guangdong 498.52 26.49 1,881.58 60.14 39.86 Guangzi 491.78 67.58 727.72 66.23 33.77 Hainan 618.19 51.76 1,194.27 72.35 27.65 Sichuan 572.24 67.62 846.26 69.27 30.73 Guizhou 359.84 54.62 658.78 81.11 18.89 Yunan 549.52 78.68 698.39 70.99 29.01 Shaanxi 428.05 48.71 878.79 79.09 20.91 Gansu 400.47 47.13 849.72 66.66 33.34 Qinghai 229.74 18.33 1,253.46 57.96 42.04 Ningxia 371.07 38.40 966.29 546.30 43.70 Xinjiang 229.92 19.52 1,178.12 79.38 20.62 Sourcet SEdC. - 59 - 3.103 Not only are the costs of vocational secondary schools extremely high. There is evidence that these highly specialized schools are much less successful in meeting labor market needs than the skilled worker schools operated by the Ministry of Labor which have a much better understanding of actual labor market realities (See Annex 3.5). As mentioned in paragraph 3.32, it is recommended that current policy on vocational education should be reassessed. There should be a gradual reduction in the ratio of vocational to general secondary schools and responsibility for specialized skill training should be transferred to labor bureaus. 3.104 Teacher's Pay. On average, the Chinese teacher's pay is lower than elsewhere in Asia. Chinese primary school teachers earn about 1.6 times the per capita GNP, while the average in the region is 2.5 times per capita GNP. Chinese secondary school teachers earn 2.8 times per capita GNP, and the average pay in the region is 3.3 times per capita GNP. Table 3.25: AVERAGE INCOME OF GONGBAN AND MINBAN TEACHERS IN CHINA, 1985 Annual Income as Z GNP Percent Distribution Primary Secondary Primary Secondary Gongban 1.9 2.9 53 87 Hinban 1.3 2.0 47 13 Average 1.6 2.8 100 100 3.105 There is also a wide disparity between gongban and minban teachers. While gongban teachers earn 1.9 times per capita of GNP, minban teachers earn, on average, 1.3 times per capita GNP. In poor regions, the minban teachers earn as little as 112 the per capita GNP. Student-Teacher Ratios 3.106 One efficiency measure that would allow increases in the salaries of teachers would be to increase the number of students per teacher. In China, there are now 25 primary school children per teacher, and 17 secondary school students per teacher, and these are likely to decline over the next decade because of slower population growth. The average for Asia is 34 students per teacher in primary and 23 students per teacher in secondary schools. This means that if China were in line with the regional average, it would be possible to reduce the number of teachers by about 30S. The reduction in the number of teachers could be used to increase teachers' pay. 3.107 The reduction in number of teachers in China does not mean an increase in class size. Class sizes are already fairly large, with about 50 to 60 children per class. A reduction in the number of teachers would imply an increase in the workload of teachers. As shown above, in para. 3.56 - 60 - (Table 3.16) urban teachers teach about 12 hours per week, and rural teachers about 18 hours per week. In other countries teachers teach on average 20 to 25 hours per week. Increases in the work-load could be achieved by providing teachers with more adequate teaching guides, and thus reducing the time spent in preparing lessons. At the secondary school level, teachers would need to be trained to teach more than one subject so that in school they can be assigned a higher work-load in which they are asked to teach more than one subject. Fees for Education 3.108 Parents in China are required to pay about 102 of the cost of primary education, 52 of the cost of secondary education and only 0.22 of the cost of higher education. This is clearly a regressive financing structure, given that higher education and most secondary school students come from higher income urban families. In comparison with other countries, fees are very low in higher and secondary education in China, as shown in the table below. Fees represent about 52 of primary costs, 32 of secondary costs and only 0.32 of higher education costs. Table 3.26: FEES FOR PUBLIC EDUCATION AS Z OF UNIT OPERATING COSTS Primary Secondary Higher China 5 3 0.3 India 0 12 5 Indonesia 7 27 19 Malaysia 4 4 6 Korea 0 34 46 Asia Average 3.2 18 10 Source: Tan and Mingat, 1989 Returns to Basic Education Investment 3.109 The returns to investment in education is usually analyzed through rate-of-return analysis which provides a measure of external efficiency. The main idea behind this approach is to compare education costs to the benefits generated later in the form of increased labor productivity. In market economies, particularly in the unregulated sectors, wages are believed to be a good measure of labor productivity. Using a similar approach, adapted to the country conditions, returns to primary education were calculated in China. Data from a household survey conducted in a relatively poor county in northwestern China were used by Dean Jamison and Jacques Van der Gaag to assess the impact of primary education on the employment status and earnings _ 61 - of urban dwellers and on the value of output of small farms.6/ For urban dwellers the return to schooling were 9.52 for males and 5.62 for females. (This is lower than the rate of returns found in other countries which exceed 15g on average.) The conclusion is that the wage system in China for civil servants and urban factory workers fails to reflect their productivity. The authors of the study conclude that primary education has a positive effect on rural earnings in China, as long as market forces, rather than government regulations, determine economic outcomes. Findings for rural areas, where market forces play a more central role, were more consistent with findings from other countries. The education level of adults in farm households had a strong impact on total farm earnings. Also, it was shown that children of poorly educated parents do less well than those of better educated ones. A 102 increase in income from sideline activities results from every extra year of basic schooling completed by the head of the household. SUMMARY OF MAIN RECOMENDATIONS (a) Additional resources need to be allocated to primary education in poor communities and, subject to practical and financial considerations, used mainly to improve skills and income of minban teachers. (b) Repetition rates, especially in rural areas need to be reduced. As an initial step, it is necessary to collect information on repetition rates in a systematic way, as is done in other countries; (c) The government should increase the number of skill training schools that are run by bureaus of labor while reducing vocational schools run by education bureaus. (d) Workload of city teachers needs to be increased and student-teacher ratios should not be allowed to fall any further; (e) Improvements are needed in the teaching of science and technology related courses; (f) Examination results should be used to assist teachers in improving their teaching methods. Feedback on student performance should be given to county and village level managers; (g) The planning of universal education should continue as a systematic exercise and efforts must be made to monitor labor market developments at the prefectural and county levels to improve the planning of vocational and higher education courses; and (h) There should be an increase in the amounts allocated by central and provincial governments for education in poor communities. ŁI Jamison, Dean and van der Gaag, Jacques. Education and earnings in the People's Republic of China. Economics of Education Review, Vol 6, No 2, pp. 161-166 (1987). - 62 - CHAPTER IV: EDUCATION FINANCING AT THE PROVINCIAL LEVEL Introduction 4.1 This chapter discusses the financing of primary and secondary education in Shaanxi and Guizhou provinces. It describes and analyzes financial sources and resource utilization in these two provinces, and highlights an analysis of two major financing issues: mobilization of additional education resources and inequalities in education financing. Recent trends in education finance indicates (a) significant increase in education expenditure during the 1980s; (b) relatively healthy growth in the amount of nonbudgeted education resources collected from households and local contributions; and (c) large and growing disparities in education resources among local levels of government. 4.2 Total resources for education have grown steadily in the two provinces, both in nominal and real terms. However, both Shaanxi and Guizhou spend less per student than the average expenditure per student for China as a whole and there is evidence of serious under-financing in poor rural communities. Most of the growth in expenditure has been devoted to increasing the supply of 'gongban teachers, despite the fall in the school population due to the declining birth rate. There are still few resources available for essential inputs such as teaching aids, libraries, maintenance of school buildings and basic school equipment; and the ^Minbanu teachers, who constitute the backbone of the teaching force in rural schools, often face serious hardship. There is also a serious problem regarding the distribution of teachers, with some urban areas having a surplus of teachers while rural schools face shortages. 4.3 Local disLricts have made substantial efforts to mobilize additional resources for education, but the financing system leads to significant inequalities. Rich communities can collect more revenues for education in the form of local contributions and other non-budgeted funds and thus, have better schools. Poor parents asked to finance a high share of the direct and indirect costs of education are finding it increasingly difficult to send their children to school and, as indicated above, many parents have come to doubt the valr.e of schooling. Although there are some transfers from higher levels of government in the form of categorical grants, i.e., for the repair of school buildings, they are not sufficient to overcome the growing disparities between poor and more prosperous districts. 4.4 Key recommendations which would help overcome problems of under- financing and inefficiency are: (a) increase the Ocategorical grants for education, i.e., the allocations from central and provincial governments, which are targeted for poor, local communities; (b) allocate all additional resources for education to primary education and, specifically, for improving school conditions, provision of essential inputs such as textbooks and teaching aids and for modest increases in the compensation of trained minban teachers; (c) reduce the direct cost of schools to poor parents; and _ 63 - (d) improve the efficiency in the utilization of teachers especially their distribution between rural and urban areas. CURRENT FINANCIAL SOURCES FOR PRIMARY AND SECONDARY EDUCATION 4.5 Primary and secondary education in China is financed from four main sources: budgeted education funds, which are government allocatic s for recurrent expenditure; non-budgeted funds, which include a variety of local contributions; capital funds for investment in buildings and household contributions which include school fees and other direct costs. The total private costs of primary education, including fees, expenditure on books and other direct expenses and the indirect costs of maintaining pupils in school represent a higher proportion of the total costs of primary and secondary education than in many Asian countries. Non budgeted funds, which include both fees and a variety of local surcharges and social contributions, represent, on average, about 20Z of all recurrent expenditure. Taking account of both non-budgeted and private costs of education, it is striking that families and local households bear more of the costs of primary and secondary education in China than in many developing countries, and the share is greater at the primary and secondary level than in higher education. Figure 4.1 summarizes the sources of financing for primary and secondary education in Shaanxi and Guizhou in 1988. Budgeted Education Funds 4.6 These funds come from allocations to education from the budgets of various levels of government. Budgeted education funds are derived from two sources: the local government's own general funds (vhich are derived from its own tax base) and categorical education grants from the budget of the next higher-level government. Since a higher level of government (usually at or above the county/city level) may set aside part of its general funds as categorical education grants for lower levels of government (townltownship level and above), these grants may be derived from the general funds of one or more higher levels of government. For example, a grant to a town/township for repair and replacement of school buildings may come from a categorical education grant provided by one or more governments at the county level, prefecture level, provincial level or central level. The education funds from this category are unstable and are currently regulated by laws. - 64 - Figure 4.1s RESOURCES FOR EDUCATION IN SHAANXI AND GUIZHOU PROVINCES ('000 Yuan) SHAANXI PROVINCE 1980 1988 2 of Total Annual (1988) Growth Rate Primary Education Budgeted resources 71,440 190,525 83.12 13.02 School factories 1,882 18,260 8.02 32.8Z School fees 10,175 18,260 8.02 7.6? Other 970 2,115 0.92 10.22 Total 84,467 229,160 100.02 13.32 Secondary Education Budgeted resources 92,790 243,671 89.12 12.8? School factories 3,223 0 0.0 Private donations 0 7,848 2.9S Foreign donations 0 196 0.12 School fees 5,670 19,684 7.22 16.82 Other 4,990 1,957 0.72 -11.02 Total 106,673 273.356 100.0? 12.52 GUIZuOU PROVINCE 1980 1988 Z of Total Annual _____________________ ___________ ___________ (1988) Growth Rate Primary Education Budgeted resources 96,678 271,385 95.9? 13.82 School factories NA 0 0.02 School fees NA 9,686 3.4Z Other 0 1,849 0.7 Total 96,678 282,920 100.02 14.42 Secondary Education Budgeted resources 54,568 133,982 87.62 11.92 School factories NA 2,695 1.82 Private donations 0 136 0.12 Foreign donations 0 0 0.02 School fees NA 7,338 4.8S Other 0 8,820 5.82 Total 54,568 152,971 100.02 13.82 _ 65 - Non-budgeted Education Funds 4.7 These are funds outside the regular government budget which are collected and utilized by the local government or at the school level. They consist of education surcharges and levies. social contributions, overseas contributions, school fees, and funds Lenerated by schools. They account for about 17Z of primary school recurrent expenditure in Shaanxi and 62 in Guizhou. They represent the diversification effort by the government in mobilizing additional resources for education as well as the capacity of the townships to generate funds. 4.8 Surcharges for education are imposed on three types of taxes paid by enterprises: sales taxes, business taxes, and value-added taxes. Surcharges have been set at 12 of each type of tax. The education surcharges collected from enterprises owned by the government at a given level are used to support education at that level. Obviously, the size of financial support depends on the number of enterprises in the area and how well they function. These funds are collected as education surcharges on the taxes paid by enterprises, rather than education taxes on enterprises or other urban tax bases. There are at least three reasons for the adoption of surcharges rather than taxes. The first reason is flexibility. Since surcharges are not taxes, they are not regulated by laws, even though they are compulsory. Thus, they can be approved or dropped more quickly; and the surcharge rates can be changed periodically and may vary among regions. Also, depending on local conditions, they can be implemented at different times. Second, it was not appropriate to establish education taxes during the past several years when the entire tax system was in a state of flux, and taxation in the economic sector has been undergoing major changes (World Bank, 1989a). Third, taxes have a negative political connotation in China. 4.9 In both Shaanxi and Guishou, the surcharge rates have been set at 12 since 1986, but some pre.:ectures, for example, Yanan in Shaanxi, will raise all the rates to 22 in 1990. 4.10 There are plans to introduce levies for education in rural areas as a new source of funding for primary and secondary education in China, to augment the generally meager public funds for education in rural areas. People living in rural areas will pay part of their net annual income to the local government to support education at that level. Such levies are to be collected at the time when peasants and other rural workers pay their agricultural taxes. The levy will not be fixed at a specific rate; but it is recommended by the Central Government that the rate should be between 1 and 3X. Local governments will have the discretion to set their own rates. Some regions in the country experimented with the collection of such levies in 1989; a wider collection effort is scheduled for 1990. Several districts in Shaanxi have fixed levies at 22, but implementation of rural education levies is slow in Guizhou. The collection of rural education levies was discussed by policymakers in China some years ago. Initlal experimentation ran into opposition by peasants who felt that they had already been subjected to too many surcharges and levies in non-education areas. It remains to be seen how successful the collection of rural education levies will be in 1990. - 66 - 4.11 Social contributions to education are contributions, in cash and/or in kind, that are gathered at the local level for repair and conatruction, such as the construction of a new school, a new building for instruction, or living quarters for teachers. Due to the nieglect of school construction and maintenance during the Cultural Revolution, many primary and secondary schools were in very poor condition at the end of the 1970s; and recent education policies have created demand for more new schools. Public funds for school construction were inadequate to meet such demand. Since the early 1980's, the mobilization of social contributions at the local level has provided badly needed economic resources for school construction. In Chinese society, there is a long tradition of placing a high value on education; most households are willing to contribute their resources for school construction. With the introduction of 'local responsibility and administration by levels," households can more easily identify themselves with the schools in their own community and are thus also willing to build *their own new schools.' 4.12 Social contributions are often used in conjunction with categorical education grants from higher government levels (that is, grants for repair and replacement of school buildings, as well as for eliminating dangerous school buildings) on a matching basis. The funds for school construction consist of three sourcess funds from the education budget of the local government, funds from the categorical education grants from higher-level governments and social contributions from the local comunity. For example, a new school building may be financed partly through funds from the municipal education budget, partly through grants from county government designated for school maintenance/repairs and partly from local household contributions. The distribution of funds from the three sources is subject to negotiation between the education office of the town and the education bureau of the county; but poorer towns are often given more favorable consideration. Each household in the town is asked to contribute and the size of the contribution is determined either on a per household basis or on a per capita basis. 4.13 Overseas contributions to education are collected at the school level and are usually used to finance buildings, library facilities or equipment. Because of their overseas connections, coastal provinces have generally collected more contributions than inland provinces. Both Shaanxi and Guizhou receive very few overseas contributions for primary and secondary schools and contributions are not recorded at the provincial level. 4.14 School fees consist of tuition and other fees. In 1989, students at the primary and lower-secondary level did not pay tuition fees; they were charged only other school fees. Students in upper-se_ondary schools have to pay both a tuition fee and other school fees; students in normal schools do not pay any school fees and receive living subsidies from the school. School fees are collected twice a year and are used at the school level. The level of school fees is determined by the government; fees are usually lower in rural areas than urban areas and for lower grades compared to higher grades. See Table 4.1 in Annex 4.2 for school fees in Shaanxi and Guizhou in 1988. Note that students in Guizhou did have to pay tuition fees in 1988. 4.15 Some schools senerate revenue themselves. Such revenue may come from student labor, from part of the profits of a factory run by the school, - 67 - or from rental of school buildings to users outside the school. Students in some primary schools in Shaanxi visited by the mission collect used bottles for the school; and students in some primary schools in Guizhou collect medical herbs for the school. School-run factories are more often operated in secondary schools than in primary schools. 40-50Z of the profits are retained by such factories for reinvestment in production and the remainder is kept by the school. To encourage the establishment of school-run factories, the government assists such factories in the procurement of raw materials and exempts them from enterprise taxes. Besides providing revenue for the school, these factories also provide employment for the household members of the school staff. For example, one of the secondary schools visited by the mission in Shaanxi has a factory whicb produces teaching aids and school equipment. Half of the forty-four epluyees of the factory are household members of the school staff. 4.16 Funds for Capital Investment in Education are used to finance new school buildings. Capital funds for education are part of the capital funds managed by planning bureaucracies which also control capital funds for other sectors. Education bureaucracies do not manage capital funds for education directly- they have to work closely with the planning bureaucracies at their own level in order to determine the number of new schools to construct within a five-year plan. Historically, there has been no significant change in how capital funds for education are obtained and managed. For each plan, the amount of capital funds for education available at each level of government is calculated on the basis of the allocation in the previous plan plus a growth rate. 4.17 Direct private costs of schooling are expenditures by parents on the schooling of their children. They consist of expenditures on school fees, textbooks, school bags, writing supplies and boarding expenses (for some students in secondary schools). School fees are a regular source of revenue for the school; their amounts in Shaanxi and Guizhou are given in Table 4.1. Parents are required to pay the costs of textbooks to the school twice a year and the school purchases the textbooks for students. In the schools visited by this mission, the direct private costs of education are about 45 yuan per academic year per student at the primary level, 85 yuan at the lower-secondary level without boarding and 130 yuan at the upper-secondary level without boarding; direct costs are higher in urban areas than in rural areas (see Table 4.1). Boarding costs are an additional 150 yuan for a secondary school student. Such costs are high relative to the average household income in the two provinces; and they have contributed to the dropout problem, especially in very poor areas. For example, in Taijiang county in Guizhou (per capita income equalled 185 yuan or 50 U.S. dollars in 1989), 673 of the 1034 students who dropped out of primary school in 1988 reported that economic difficulty was the major reason for leaving school. In an experiment conducted in two primary schools in the same county recently, female enrollment has increased substantially (from 202 of the student population to 502) as the costs of textbooks and school fees were halved. - 68 - Table- 4.1 SCHOOL FEES AN OTHER DIRECT PRIVATE COS OF PRIMRY AND RYM MEWCATION IN SHAMS! AND IIHDW PROVINCES, INS (YNU) PIM LOUW SŁCOMY UPPR SECONDARY Urbsn Rural Uran Rural urban Rural Shaanxt Tuition a 0 0 0 12 10 Other chool fe. 7 6 10 14 s0 40 Textbooks 21 1i 48 80 sO 80 Writing supplls 8 5 15 10 20 1S isc.l lansouso 15 is 20 20 25 25 Total 51 41 so 74 187 120 Tuition 2 1.5 2.5 2 8.1 2.6 Other school toes 7 7 18 12 52 44 Textbook. 24 10 40 8a 400 40. Writing .upple 5 C 15 10 20 15 Miase llneouso 1C 15 20 20 25 25 Total s6 so 91 79 140 182 J Estimted coas based on diesslon with school personnel an parent o Doe not Include boarding cost In som seconary schools which totl about 160 yuan per yer Source: See Annx 4.2 4.18 Household contributions are a very important source of economic resource to primary schools in rural areas. Rural primary schools are built from resources obtained from the village (or production team or production brigade before 1978). The mayor of the village, who is also the head of the village committee, takes the leadership in collecting contributions from households in the village and manages the construction of a school. Contributions are also collected from households to provide living subsidies to minban teachers. For very poor areas in these two provinces, minban teachers do nct receive living subsidies in cash, but in kind. For example, a minban teacher in a village in Yanan prefecture visits households in the village in turn to obtain his meals. Information on household contributions in rural areas is not collected and reported in the financial records of education bureaucracies. 4.19 The indirect costs of schooling refers to the economic opportunities foregone by families who send their children to school, such as the value of child labor to a household. No attempt was made to estimate such costs in the - 69 - two provinces. However, school personnel reported that such costs did contribute to the dropout problem, especially at the upper grades of primary school in Guizhou and in lower secondary schools in both provinces. 4.20 Table 4.2a (for entire table see Annex 4.2) presents budgeted and non-budgeted funds for primary and secondary education in Shaanxi province and Guizhou province for the year 1988. For both provinces, budgeted funds were the major source of funding at both the primary and secondary levels. In Shaanxi, budgeted funds accounted for 83.12 primary education expenditures and 74.7Z total secondary education expenditures (and 78.2S for the two levels of education combined); the corresponding figures for Guizhou were 92.4Z and 86.7Z (and 90.42). The available information for Shaanxi does not show the breakdown of budgeted funds by levels of government, but the information from Guizhou does confirm that local governments were the primary source of funding for primary and secondary education. In 1988, central and provincial government funds accounted for only 12.8S of total budgeted funds in Guizhou. Table 4.2: BUDGETED AND NON-BUDGET FUNDS FOR PRIMARY AND SECONDARY EDUCATION IN SHAANXI AND GUIZHOU PROVINCES, 1988 (Percentage of Total Recurrent Funds) - --Shaanxi ------- ---------Guizhou------- Primary Secondary Primary Secondary Budgeted Funds 83.14 74.72 92.36 86.73 Non Budgeted Funds 16.87 25.28 7.64 13.27 Total 100.00 100.10 100.00 100.00 4.21 At the primary-education level, social contributions and school fees were the two major non-budgeted sources In both provinces. Education surcharges were relatively small (most primary schools are rural). Furthermore, primary schools in both provinces hardly generated any revenue themselves. Overseas contributions were too insignificant to be recorded in these provinces. At the secondary-education level, social contributions and school fees remained the two major non-budgeted sources in Shaanxi; in Guizhou, the two major non-budgeted sources were school surcharges and fees. Diversity in Non-budgeted Funds 4.22 It is instructive to compare the two provinces in terms of financial sources. For both levels of education, Shaanxi province had a much higher percentage of non-budgeted funds than Guishou province. Even though both provinces had very similar population in 1988 (31.8 million for Shaanxi and 31e3 million for Guishou). total primary and secondary non-budgeted funds for Shaanxi (121 million yuan) were almost three times the level for Guizhou (43 million). A major reason for this is the differences between the two - 70 - provinces in economic conditions and financial capacities. In 1988, total provincial output was valued at 27.6 billion yuan in Shaanxi and 20.6 billion yuan in Guizhou; per-capita income was 703 yuan for Shaanxi and 525 yuan for Guizhou. The differences were most clearly reflected in the much higher social contributions and self-generated funds collected in Shaanxi. Both Shaanxi and Guizhou collect less in the form of non-budgeted funds than many other provinces in China, which reflects their low per-capital income. Guizhou has one of the lowest levels of per capita income in the country and Shaanxi is also below the national average. The overall percentage of non- budgeted funds was 21.8Z for Shaanxi and 9.6Z for Guizhou, compared with 30.3Z for the national average. 4.23 There are also clear differences between primary and secondary education in their reliance on non-budgeted funds. For both provinces, secondary education had a higher percentage of non-budgeted funds and a larger per student (and per school) non-budgeted fund than primary education. Most primary schools are in rural areas and do not benefit from urban education surcharges; school-run factories are mostly operated in secondary schools, not primary schools; and per-student school fees are higher in higher grades. Primary schools in poor rural areas face the most difficult financial condi- tions. The government needs to provide more financial support for primary education from budgeted funds. 4.24 Capital funds for primary and secondary education are small compared to budgeted funds and non-budgeted funds. For example, in 1988, Shasnxi province received 5 million yuan in capital funds from the central government for primary education and the provincial government contributed 13 million in capital funds for primary and secondary education. Total capital funds for primary and secondary education was thus 18 million yuan, which represented 141 of recurrent expenditure financed from non-budgeted funds and 42 of budgeted funds. Trends and Variations in Budgeted and Non-budgeted Funds 4.25 Data on trends in budgeted and non-budgeted funds over time and data for individual prefectures and counties demonstrate that the mobilization of additional resources for education from non-budged sources is strongly affected by relative economic capacities. Tables 4.3 and 4.4 in Annex 4.2 show budgeted and non-budgeted funds over time for Shaanxi and Guizhou province. They indicate that in both provinces the share of non-budgeted funds for both primary and secondary education generally increased from 1985 to 1988, except for a dip in 1987. This pattern is consistent with the general rise in per-capita income during this period. Shaanxl had higher percentages of non-budgeted funds than Guizhou throughout this period which reflects its higher per capita income. A poor province like Guizhou is very limited in its ability to raise non-budgeted resources for education. These two tables also show that total budgeted and non-budgeted funds for primary and secondary education have increased quite rapidly since 1985 in each of the two provinces. For Shaanxi, the annual growth rate was 28S in 1986, 72 in 1987 and 37S in 1988; the annual growth rate for Guizhou was 142 in 1986, 3X in 1987 and 192 in 1988. Thus, except for 1987, the growth in total budgeted and non-budgeted funds has been very substantial after 1985. Data from the _ 71 - provinces also indicate that while, in general, non-budgeted funds increase steadily over time, the amount from social contributions is subject to large fluctuations. In Guizhou province, the amount of social contributions collected between 1984 and 1988 was respectively 3.5, 6.3, 6.4, 4.6, and 3.7 million yuan. This fluctuation reflects the launching of collection campaigns at different times. 4.26 Tables 4.5-4.9 in Annex 4.2 provide details of financial sources for primary and secondary education in individual prefectures, cities and counties in Shaanxi and Guizhou. These demonstrate very clearly that differences in the economic capacity of different localities result in marked disparities in the amounts of non-budgeted funds collected at the local level. UTILIZATION OF EDUCATION RESOURCES 4.27 This section examines how education resources are utilized in Shaanxi and Guizhou, with a focus on primary and secondary education (especially general secondary education). It discusses education expenditures by input-based expenditure categories (i.e., expenditures on teachers, buildings, books, etc.), by larger expenditure categories (e.g., personnel expenditures, non-personnel expenditures, etc.), and by levels of education. Variations in unit costs by level of education and across areas are also analyzed. Information is presented for 1988 and for other selected years during the 1980s. Recurrent and Capital Expenditures in Shaanxi Province and Guizhou Province 4.28 Tables 4.3 and 4.4 show education expenditures in 1988 by categories in Shaanxi province and Guizhou province respectively. In Shaanxi, personnel expenditures accounted for 952 and 932 of recurrent expenditures at the primary level and general-secondary level respectively; the corresponding figures for Guizhou were 96? and 902. Among non-personnel expenditures, more was spent on non-instructional categories than on instructional categories for both primary education and secondary education in both provinces; and subsidies to students (such as awards to outstanding students in both primary and secondary schools, and living subsidies to students in normal schools) were insignificant. The small amounts of instructional expenditures indicate that a negligible portion of the recurrent budget was spent on school supplies, textbooks and other instruction-related items. The magnitude of the figures indicated that not much was spent on library materials (such as reference books, journals, and books and other reading materials in each school subject) or school equipment. It is instructive to note that, for primary education in both provinces and for secondary education in Guizhou, funds for repair/replacement accounted for more than 502 of total capital expenditures; in other words, capital funds from planning bureaucracies accqunted for less than 502 of total capital expenditures. Yet on a per student basis, capital funds were still quite small, about six to eight yuan per student per year at the primary level, and 30-50 yuan per student per year at the secondary level. The importance of social contributions for capital investment in education is clear. 72- T*l- 4.$: ECWET AND CAPITAL XPeNriUE ON PRIMARY MID OUWL SECORY EcTION IN SHAMS pROvNC i11 (MILLION VUMt) PNmee Eotnon n Edut Asoiint S Amun P ronnl lee."4 9.0 109.19 92.62 Instruction 1.68 1.08 8.22 1.10 Adenlitretive, 6.S0 8.09 9.88 4.62 travel, and meeting. Student subsidlie 0.06 0.08 0.72 0.84 MIcl Ione" 2.12 1.19 1.90 0.92 Subtotal 0.51 6.84 16.76 7.86 Total Recurent 17".96 100 218.06 100 School oquppent. 2.01 9.09 8.20 8.90 RepelrlroPlacsent 11.07 50.07 27.90 84.65 capital funds 0.08 40.64 40.52 61.89 Total Cesital 22.11 100 80.67 100 * Includes expenditures on library materials Sourc: See Anx 4.2 - 73 - hlo A 4t ItRECURRENT ND CAPITAL EXPENITURES ON PRIMRt AND M NERAL ZEMADRY EDUCATION IN OUIINU PROVINCE, 1SO (MILLION WUAN) amoeral PrEtiry Edovcatig ieg2*rY Education Personnel 226.49 96.66 69.90 89.68 Noo-p*raonnel Iwatrutlon 1.02 0.69 1.68 1.67 Adlniatrativ., 5.47 2.83 6.66 6.54 trael, *and oetng. Student Aubsadi.. 0.46 0.20 2.29 2.28 Miec llgneous 2.16 0.9a 0.#0 0.98 Subtotal 9.78 4.14 10.61 10.47 Toal Recurrent 236.22 100 100.41 10o School equIpment. 2.7 6.99 4.11 12.19 Reelr/plaQ.aent 22.11 65.40 17.33 61.41 Capital toub 15.01 37.61 12.2? 86.40 Tota Cvltal 39.01 t10 33.71 t00 * Include expWnditurea on library material. Sore: See Anmx 4.2 Sub-standrd Education Enenditures 4.29 The small amounts spent on instructional items, school equipment, and buildings are consistent with the very poor conditions in most of the schools visited by the mission, and especially for primary schools and lower secondary schools. The underfinancing of such educatian inputs can be clearly seen. In fact, both provinces are well under national norms for minimum expenditures on such inputs. In 1984, the Ministry of Education (now the State Education Commission) issued a set of standards for expenditures by level of education. Standards or norms were set as 'common education esoenditures ( onavona education ezpenditures) consisting of non-personnel expenditures and expenditures on repairlreplacement, school equipment, and library materials. The term "common education expenditures' includes non-personnel expenditures financed from both budgeted and non-budgeted funds. The norms were 20 yuan per student for primary schools, 32 yuan per student for lower-secondary schools, and 45 yuan per student for general upper-secondary schools. If these norms had kept pace with inflation their level, In 1988 prices, would be 29.2 yuan, 46.7 yuan, and 65.7 yuan respectively for the three levels on a per-student basis, but as of 1989, the norms were still set at the 1984 nominal levels. Table 4.5 (for entire table - 74 - see Annex 4.2) presents the per-student common education expenditures in 1988 for the two provinces and compares them with national norms. At the primary level, such expenditures amounted to only 6.62 yuan per student in Shaanxi and 7.70 yuan per student in Guizhou respectively. In other words, actual expenditures amounted to only 332 and 39? of the national norms for Shaanxi and Guizhou respectively and even lower proportions if updated norms were used. At the secondary level, per-student conmmon education expenditures were close to national norms for minimum expenditures in nominal terms, but were still 35-402 below such norms in real terms. As a percentage of recurrent costs, they are less than 22 in both Guizhou and Shaanxi. 4.30 Efficiency in resource utilization could be improved by reallocating savings in personnel expenditures to essential non-personnel inputs, such as library materials, teaching aids and school equipment. Non-personnel items should be raised to at least 10? of recurrent costs. Table 4.5t PER STUDENT 'COiMON' EDUCATION EXPENDITURES IN SHAANXI AND GUIZHOU PROVINCES AS COMPARED TO NATIONAL MINIMUM STANDARDS, 1988 ______Shaanxi ------ ---------Guizhou--------- Primary Secondary Primary Secondary Per Student Common Education Exgenditures 6.62 29.15 7.70 32.27 (Yuan/Student, 1988) National Minimum Standard 20.00 32 (lower) 20.00 32.00 (lower) (1984, nominal terms, yuan) - 45 (upper) - 45 (upper) National Minimum Standard (1988, real terms, yuan) 29.20 46.72 (lower) 29.20 46.72 (lower) - 65.70 (upper) - 65.70 (upper) * General Secondary Education. Sources See Annex 4.2 Recurrent Esxenditures Over Time 4.31 Table 4.6 shows the breakdown of recurrent expenditures into personnel and non-personnel categories over time in Shaanxi and Guizhou. Several observations can be made. First, in nominal terms, total recurrent expenditures have increased steadily over time at both education levels in both provinces. Second, with some dips in specific years, both personnel expenditures and non-personnel expenditures followed a rising trend between 1982 and 1988, in nominal terms. Third, personnel expenditures grew at a faster rate than non-personnel expenditures between 1982 and 1988. For - 75 - example, in Shaanxi, personnel expenditures and non-personnel expenditures increased by 1702 and 89Z respectively at the primary level, and by 192Z and 332 respectively at the secondary level; in Guizhou, the corresponding growth rates were 1332 and 972 respectively at the primary level, and 1582 and 372 at the secondary level. Fourth, in both provinces, personnel expenditures at the secondary level grew at a faster rate than that for primary education; but non-personnel expenditures at the secondary level grew at a slower rate than that for primary education. Fifth, in both provinces, as a percentage of total recurrent expenditure, personnel expenditures at both education levels followed a rising trend, though with some dips in specific years (see Table 4.6). And the net increase between 1982 and 1988 was larger at the secondary level than that at the primary level; this was due to different growth rates mentioned above. Tabl- 4.6: RECURRENT EDUCATION XENDPITUES ON PRIMARY AND GENERAL SECODARY EDUCATION IN SHAANXI AND UIZHOU PRINCES, 1980-1988 (m111h1n current yuan) Amount AMounr m Sosn ounltaAmn 1962 Personnel 62.85 92.65 67.95 65.11 9#.80 96.14 84.61 31.90 Non-e ronnl 5.02 7.45 11.69 14.89 4.95 4.66 7.96 18.04 Total 67.87 100 79.64 100 101.76 100 42.47 100 1 a8 ErP!onneI 66.08 92.68 68.17 84.75 90.17 98.89 85.26 68.28 Non-personnel 5.84 7.42 12.27 15.25 5.67 6.11 7.11 16.77 Total 71.97 100 60.44 100 0.04 100 42.39 100 1934 oRsonnol 76.86 90.88 76.74 65.15 109.08 08.75 89.15 82.48 Non-personnel 6.17 9.0? 18.78 14.8t 7.27 6.25 6.84 17.57 Totel 64.52 100 92.47 100 116.80 100 47.49 100 1965 Pe-Monnel 94.64 91.60 101.19 67.92 147.71 94.78 56.96 84.49 Non-personnol 8.66 8.40 18.90 12.08 6.22 6.27 10.27 15.51 Total 103.82 100 115.09 100 155.98 100 66.28 100 Personnel 115.20 96.11 180.04 69.92 160.65 94.78 6.06 67.67 Non-personnel 6.58 6.89 14.C8 10.06 6.64 6.22 6.90 12.18 Total 128.78 100 144.62 100 169.49 100 74.04 100 196t P;rronnel 127.76 98.78 148.04 91.26 184.68 95.28 70.08 88.24 Non-personnel 6.55 6.27 14.00 9.75 9.25 4.72 9.41 11.70 Total 186.81 100 160.04 100 194.06 100 160.04 lOO 1966 Personnel 168.44 94.06 196.18 92.62 225.49 96.68 89.90 69.58 Non-personnel 9.51 5.B4 15.78 7.88 9.78 4.14 10.51 10.47 Totel 177.95 100 218.96 100 285.22 100 100.41 100 Source: See Annex 4.2 - 76 - Recurrent E enditures and E 0lo ment of Government Teachers 4.32 In both provinces, most of the increases in recurrent expenditures over time, both in amounts and in proportion, went to personnel inputs. The increase in personnel expenditures could be due to a combination of factorss increase in the number of education personnel, increase in payments to education personnel as a result of rising scales for salaries, benefits, and subsidies, increase in payments as a result of higher qualifications of teachers, and increase in payments to teachers due to tenure. Although the exact contributions of each factor to the overall increase in personnel expenditures will require a more detailed study and additional data, available information from the two provinces indicates that an important contributor was the increase in the number of government education personnel, especially gongban teachers, over time. Table 4.7 shows the number of education personnel in 1984 and 1988 in the two provinces. The number of total govern- ment education staff increased from 292,535 to 303,756 in Shaanxi, and from 143,772 to 164,379 in Guizhou. The number of non-teaching staff decreased during this period at both levels of education in both provinces, the increase in total government education staff was thus due to the employment of addi- tional gongban teachers. - 77 " 3Wo47: N13 OF ECTION PERSOINL IN SHAANXI aND SSJUNU PRovINC, 1934 AND 1939 NMI POIN 0J3O PROVŁNCE 1964 19tu 1394 1333 o.veion.nt Etlo. Primary Education: engban teacher. 169,224 166,973 79,266 92,9869 Owhr ,t.ff 14,218 14,089 13,619 12,916 Subtotal 163,442 181,067 52,335 105,387 Secondry Education: Gonbaan tXchers 57,935 101,72 40,062 49,326 Other Staff 21,108 20,987 10,825 3,666 Subtotal 109,093 122,689 60,6e? 53,492 Primary and Jecondary Total 292,585 803,756 148,M 164,879 Mibnan teacher Primery level 106,443 9a,246 76,449 70,4S Secondary level 16,294 1,263 1,31? I'72 Total 123,737 105,509 73,26 72,887 Sources See Annex 4.2 4.33 In China, graduates of teacher training institutions are guaranteed employment by the government and they will become gongban teachers as soon as they begin teaching. Yet teacher training institutions in these two provinces have kept on increasing their number of trainees in the past several years despite favorable and falling student-teacher ratios. In a sense, the school has become an instrument of employment policies of the government by absorbing surplus urban labor. At the same time, as pointed out previously, there are significant imbalances in the distribution of teachers between urban and rural areas. Together, these two factors contribute to serious inefficiencies in the utilization of scarce resources in the two provinces. Utilization of Resources among Sub-sectors of Education 4.34 Between 1982 and 1987, Shasuui province spent an average of 13.62 of its total government budget on education; the corresponding average for Guishou province was 14.92. Education expenditures by sub-sectors in 1987 are shown in Table 4.8. It can be seen that in 1987, Shaanxi spent 527.8 million yuan on education, which was equal to 14.01 of total government expenditure or 2.3S of total national product of the province. In the same year, Guizhou spent 453.4 million yuan on education, which was equal to 14.42 of total - 78 . government expenditure or 2.7X of total national product of the province. Although the two provinces have a similar size population, they allocated education expenditure very differently. The largest share of total education expenditure went to general secondary education in Shaanxi and to primary education in Guizhou. Guizhou spent relatively more on primary and on higher education than Shaanxi, which spent more on secondary education. Table 4. : EDUCATION EXPENDITURES BY SUWSECTORS IN SHAANXI AND WUIZHOW PROVINCS, 1987 As X oA X of Amount TOtal Education Total Govt. As X of (millon Yuen) Exponditure Expenditure National Product SHAANXI PROVINCE All of Education 627.8 100.0 14.0 2.8 Prlmary Edueation 146.7 27.3 8.9 0.6 General Secondery 167.2 8.4 4.9 0.8 Hlgher Eduetion 51.9 9.8 1.4 0.2 Secondary Vocational 14.2 2.7 0.4 0.1 Teacher Education 15.4 8.0 0.4 0.1 Adult Education 16.7 2.9 0.4 0.1 Pro-school Education 4.4 0.0 0.1 0.0 Specll Education 0.9 0.2 0.0 0.0 Otherse 91.4 17.8 2.4 0.4 JizmHOU PROVINCE All of Eduetlion 468.4 100.0 14.8 2.7 Primary Education 198.0 42.0 6.1 1.2 Gneral Se ondary 96.6 21.8 8.1 0.4 Higher Educaton 60.8 18.4 1.0 0.4 Secondary Vocatlonal 10.1 2.2 0.8 0.1 Teacher Education 16.8 8.8 0.5 0.1 Adult Eduatlon 10.2 2.2 0.8 0.1 Pro-achool Education 8.1 0.7 0.1 0.0 Special Education 0.6 0.1 0.0 0.0 Othere* U.6 14.0 2.2 0.4 a Includes secondary specialized technical education, TV education, and other. Source: Soo Annex 4.2 4.35 As a proportion of total government education spending, China spends 282, 282, and 212 respectively on primary education, secondary education, and higher education. Thus compared to the country as a whole, Shaanxi spends more on secondary education. Guizhou, on the other hand, spends less on general secondary education, but below the national average for primary education. Unit Costs in Nominal Prices and Real Prices Over Time 4.36 Table 4.9 presents per-student total education expenditures (from budgeted and non-budgeted sources) in primary and secondary education for Shaanxi, Guizhou, and China as a whole, for the period 1980 - 1988. Figures are given in both nominal and constant prices (1980 base year). In nominal terms, per-student total education expenditures rose steadily over time in - 79 - both provinces, while, in real terms, except for a stagnant time in 1987, per-student total education expenditures also followed a rising trend over time in both provinces. The net increase in per-student total education expenditure in both nominal and real terms between 1988 and 1980 was greater for primary than secondary education in both provinces. For Shaanxi, the increase was 3632 and 2302 for primary education and secondary education respectively in nominal terms; the corresponding figures were 1942 and 1082 in real terms. For Guizhou, the increase was 2532 and 2462 for primary education and secondary education respectively in nominal terms; the corresponding figures were 1242 and 1172 in real terms. Despite almost uninterrupted increases over time, per-student total educational expenditures for the two provinces were lower than national averages for each of the nine years and for each level of education. This fact is obviously related to the below average economic capacities for the two provinces. Table 4.9: PER-STUDENT TOTAL EDUCATION EXPENDITURE IN SHUANKI AND GUIZHOU PROVINCES, 1980-1988 (YUAN PER STUDENT, CURRENT AND 1980 PRICES) 1980 1981 1982 1983 1984 1965 1980 1987 1988 SHAANXI PROVINCE Primary Education Current prices 16 18 20 28 27 84 Ss 59 74 1980 prices 16 10 19 22 25 29 44 44 47 General Secondary Current prices 51 e0 Es 67 68 88 118 121 169 98O prices 51 59 62 e8 62 74 90 90 106 GUIZN4OU PROVINCE Primry Education Current prices 17 20 24 26 20 86 87 48 60 19O price8 17 20 28 24 20 so 29 32 38 Gn,eral S.condsry Current prices 41 64 10 so 79 92 99 104 142 1980 prices 41 63 s8 o 6 73 77 79 77 89 NATIONAL AVERAGE. Primry Education Current price 28 26 81 84 89 47 48 60 NA General Education Current prices 60 70 8B 97 108 129 185 141 NA o Source: State Education Coamission, Education Statistical Yearbook of China, 1968. Beijing, Chino, p. 115. - 80 - Costliness of Education 4.37 The relative costliness of education in Shaanxi and Guizhou in 1987 is presented in Table 4.10. The table presents figures on several measures of the costs of education: (1) unit costs of education (total education expendi- ture per student) by level of education, (2) unit costs as a percentage of national product of provincelcountry, (3) the ratio of unit cost as a percentage of national product for a province to the unit cost as a percentage of national product for the county, and (4) an index of overall costliness of education in a province which is defined as the arithmetic average of the ratios (defined in (3) above) for primary education, secondary education, and higher education. Several observations can be made. First, for both provinces, unit costs were lower than the national average for primary and secondary education, but were higher than the national average for higher education. The above-average cost for higher education actually represented low internal efficiency in higher education in these two provinces (see Chapter 6). Second, as a percentage of per-capita national product, higher education was very expensive in China and in the two provinces in particular; it was also expensive compared to other countries (Tan and Mingat, 1989). At the primary and secondary levels, Shaanxi and Guizhou spent more as d proportion of GNP per capita than China as a whole, even though they had lower unit costs than the national average. This reflects the inequity in education financing among provinces. Despite their larger gregional' effort in educational spending, they still lag behind other regions in unit costs. Such inequity is also found in similar forms in a decentralized education system in other parts of the world. Third, taking unit cost as a percentage of national product as a basis of comparison between a province and the nation, all three levels of education in Shaanxi and Guizhou were relatively more expensive than China as a whole, particularly at the higher-education level. Fourth, from the index of overall costliness, education for Guizhou was more expensive than education for Shaanxi which was more expensive than for the country as a whole. Table 4.i in Annex 4.2 presents the index of overall costliness of education for China and o3ther Asian countries. It can be seen that education in China is relatively more expensive than education in most other Asian countries; and education in Shaanxi and Guizhou are even more expensive. Table 4.11 presents unit costs of three levels of education for Shaanxi, Guizhou, China, and other Asian cemtries. It shows that, while unit costs for primary and secondary education in Shaanxi and Guizhou are lower than most Asian countries, unit costs for higher education in these two provinces are higher than other Asian countries. - 81 - Table 4. 10 COSTLINESS Of EDUCtTION IN SHAANXI AND u1ZHuW PROVINCES, 197 StAAI WIZNOU CHINA Pqr-ce Ita OW Population (Stilton) J0.3 80.71 10,60? OW () liIon yuan) 28,810 10,560 11,049,000 OW per capita (Yuan/peron) 755 5C9 1,022 Unit Cot ot Education (yuan/student) Primary education 69 48 60 Secondary edueation 121 104 141 Higher education 2,580 2,825 2,115 Unit Coste as U Per-casit˘ OWP Primary education 7.6 7.9 6.9 Secondary education 16.0 19.8 18.6 Higher Education 885.0 481.0 127.0 RLtio of Unit Cost to National Averaj Primary education 1.8 1.8 1.0 Secondary education 1.2 1.4 1.0 Hiwher eduection 1.5 1.0 1.0 Ind of Overall Costlnes 1.$ 1.5 1.0 a Sourco: Stat. Statistical sureu, Statistical Yearbook ot Chtna. 196;i and State Education Comission, Statistical e of dcChina.-1. - 82 - Table 4.11: UNIT COSTS OF PUBLIC EDUCATION IN CHINA AND SELECTED ASIAN COUNTRIES Unit SO5- t of ducation as U segr-pasIta Pri ma.y Edufotlont ° conry Eduscalon -- lgher Educatlon Asion Countri.a" Bangladesh 6.4 80.0 284.6 Indio 9.2 27.0 248.8 Indonelo 12.6 28.8 91.1 Korea 16.6 28.4 70.6 Malayela 14.1 21.8 190.8 Npal 9.0 18.6 249.0 PhilIppines 6.8 6.6 50.0 Sri Lanka 8.1 9.8 88.8 Thailand 16.5 16.8 89.0 Averag 12.4 23.7 285.8 Chinab All reglons s.9 18.6 227.0 ShaanxI province 7.8 16.0 886S. Guizhou province 6.0 19.8 481.0 Source: Table 4.20, and Tan A Mlngat (1009), Table 8.2, p. 66. Notes: * Values are for mid-1980. b Vales are for 1987. UNDERFINANCING AND RESOURCE MOBILIZATION Under-funded Primary and Secondary Education 4.38 Primary and secondary education in Shaanxi satd Guizhou are under- funded. This is shown by figures on per-student comon education expenditures which are well below nationa1 minimum standards. This is also confirmed by observation of schools. Most of the schools visited by the mission have inadequate library materials, teaching aids, and school equipment; school buildings are in very poor conditions and some have deteriorated to a dangerous level (especially in Shaanxi). There is a particular problem in the case of small one-room schools in rural areas. Even the key schools visited by the mission have sub-standard facilities in terms of library materials, school equipment. and laboratories. - 83 - 4.39 There has been increased expenditure on teacher salaries, which is mostly due to employment of additional gongban teachers. But the salaries of gongban teachers remain low relative to other professions. For example, a recent survey by the State Statistics Bureau showed that the income of teachers and other personnel working in cultural posts ranked number eleventh among twelve occupations. The basic salary of teachers has not been adjusted for a long time. It was increased by 102 in 1987 but this was nullified in real terms by inflation rates of 72 in 1987, 182 in 1988 and an estimated 192 in 1989. Also, compared to other occupations, teaching has some of the worst housing facilities. The visit in Shaanxi and Guizhou confirms the existence of such problems for teachers. 4.40 As explained before, the plight of gonglan teachers pales compared to that of minban teachers. Ninban teachers account for about half of the total number of teachers in rural primary schools in Shaanxi and the majority of teachers in rural primary schools in Guizhou. That is, they are the backbone of the teaching force at the village level. Minban teachers do not get a salary from the government, they receive government living subsidies which total only about 40 yuan per month. Although they receive living support from the local community, the amount of such support depends on community resources and is particularly meager in poor areas (for more details, see the section below on inequalities between gongban and minban teachers). Resource-mobilization Strategies Being Considered in Shaanxi 4.41 Not only does underfinancing affect the conditions of schools adversely, it also delays the completion of nine-year compulsory education. The implementation proposal described in the 1985 national reform document is actually too ambitious for Shaanxi, and for Guizhou in particular. Provincial education policymakers are realistic and they understand that the pace of education development is determined by the economic capacity. Adequate resources are required to speed up the completion of nine-yetr compulsory education. Mobilizing additional resources is the major financing issue for primary and secondary education in Shaanxi and Guizhou. In Shaanxi, the strategies considered by education policymakers to mobilize additional education resources in the near future can be summarized as follows: (a) Guarantee 'two growths" in educational expenditures, that is, the growth rate in appropriation to education at the provincial and lower levels should be higher than that of government revenue at those levels, and per-student common education expenditures should increase annually. In recent years, the two growths have been achieved at the provincial level and for some local areas. The task is to ensure implementation at the local levels. (b) Increase the amount of social contributions by expanding collection efforts and using encouragement strategies (for example, putting up the name of donors on school facilities). (c) Increase the amount of education surcharges by raising the rate from 1S to 22. This will be implemented in the entire province in 1990. - 84 - (d) Introduce levy on construction of premises. The levy is two yuan per square meter in urban areas and one yuan in rural areas. This will also be implemented soon. (e) Introduce levy on import products which are under government control. For example, Yanan prefecture plans to impose a 32 levy on the value of imports such as automobiles, refrigerators, electric fans, cameras, and VCRs. This will be implemented in Yanan prefecture in 1990, and is being considered in other areas. (f) Establish a Opeople's education trust' (which should more properly be called 'people's education funds* since they are not trust funds in the usual sense of the term) at each level. The funds are to come from a broad-based collection effort organized by the government. The sources are: (a) 12 of the basic salary of cadres, (b) rural education levies, based on 1 to 3? of the annual net income of the rural population, with higher rates for households who have higher per capita income, (c) a s_ll percentage (around 0.81) of the income of individual households engaged in business, and (d) a small percentage (around 0.5Z) zf the sales revenue of enterprises in townsltoonmhips. (a) and (b) are expected to be the major sources for the people's education trust. About 902 of the trust funds will be used to provide a monthly salary and other benefits to min ban teachers. The majority of the remaining 102 will be used to supplement common education expenditures at the primary and secondary level; the remainder will be used on adult education, vocational education and other items. The trust funds will replace living subsidies to minban teachers from the households (i.e., contributions will not be collected from each household in rural conunities). The objective is to provide minban teachers with a regular, stable, and larger income. In one of the areas visited by the mission, Chenggu county in Eanshong prefecture, a people's education trust had been in effect since October 1989. The county is a relatively well-to-do county in the province and it is one of the few counties that first experimented with the trust funds. The target for 1989 was 2.8 million yuan, which was about 2.52 of total budgeted and non-budgeted funds for primary and secondary education in 1989. By November 1989, the county had collected 1.8 million yuan and the rest was expected to be collected by the end of the year. The plan was that, each month, a minban teacher would receive a salary of 78 yusan and benefits of 32 yuan. The fund would also increase the pension for vinban teachers. Before 1988. each retired minban teacher would receive a payment of 15 yuan for each year of service; the target now is to increase that amount to 100 yuan per year of service. The other areas, such as Louchuan county and Yanan city in Yanan prefecture, and Hanzhong city and Mian county in Hanzhong prefecture will begin collecting trust funds in 1990. Resource-mobilization Stratesties Beina Considered in Guishou 4.42 In Guizhou province, the following strategies are considered for mobilizing additional resources for educationt - 85 - (a) Increase the rate of education surcharges from 1S to 22. This is currently under discussion. (b) Expand the collection of education levy in rural areas. Households with income less tban 200 yuan per capita will be exempted. Other households will be charged a rate between 11 to 1.5Z. (c) Adjust the amount of miscellaneous fees collected In primary schools. In 1989, the amount per student per year was set at 7 yuan in cities, 6 yuan in counties, and 5 yuan in villages. In subsequent years, the amount will increase with the rate of infla- tion. Students from very poor families will pay reduced fees or be exempted. (d) Consider the establishment of people's education trust. This strategy is currently under study in the province. (e) Increase the amount of revenue generated by schools themselves. An Examination of Resource-mobilization StrateRies 4.43 One strategy for resource mobilization is to increase the share of public spending and the proportion of national spending for China to the corresponding average level for developing countries. This implies that provincial and lower levels of government need to increase their share of government spending devoted to education. The amount of increase at each level certainly requires careful study in order to take. account of varying conditions ln different parts of the country. 4.44 In the past several years, many educators and observers in China have called for legislation on education to specify the share of fiscal resources devoted to education at each level of government (':entral, provincial, and county levels); they also call for increasing the proportion of national resources to education. The purpose of the legislation is to ensure that adequate amounts of fiscal resources will be devoted to education; and policymakers at various levels will be compelled to achieve the spending targets. Some however argue that this should not take place before current inefficiencies in the utilization of existing resources (teachers, space, etc.) are addressed. 4.45 The establishment of a people's education trust can be a very positive step towards improving the financial conditions for minban teachers. The compensation to minban teachers wlll be more regular, stable, and larger. The size of any increase, however, obviously depends on the local resource base. Unless there is some form of intervention in the distribution of such funds among localities, disparity in compensation will likely exist among localities as a result of differences in the resource base for such funds. 4.46 School-run factories for generating revenue for schools have been a subject of discussion among educators in recent years who often have divergent views on the subject. Many administrators in education bureaucracies like the practice because it provides addltional resources to schools themselves and - 86 - thus, lessens the financial burden and pressure on education bureaucracies. Some school staff like it because of the opportunity for employment for their family members. But other educators, including some principals, do not like the practice because the school is a place for teaching and learning, not for profit-making activities. From an economic point of view, there are also different viewpoints. Some people claim that school-run factories can produce products which most outside enterprises do not make (e.g., because of production technology) and thus, contribute to national output. Others point out that such factories are relatively inefficient because they are protected by the government and enjoy many tax exemptions not available to enterprises outside the school. From the viewpoint of resource mobilization for education, school-run factories are beneficial in that 50-602 of the profit is set aside for the school. This part of the profit would not be used for education if the factories were not run by the school (more precisely, a very small part may ultimately go back to the school through taxation). The exemption in tax payments means that part of the foregone tax revenue for the government is used on the school directly. But, to the extent that school-run factories are inefficient, there is a net loss for society, and the net gain for the school is reduced because of lower national output. Difficulties of Poor Provinces 4.47 Even if the above strategies are successfully implemented, primary and secondary education in Shaanxi and Guizhou is likely to lag behind other economically more developed provinces. Because of their weaker economic bases, both provinces will generate smaller per-capita tax revenue than the other economically more developed provinces. This implies that for a given fiscal effort for education, Shaanxi and Guizhou will have below average per-student government education expenditures. Also because of lower per-capita income, households in these two provinces have less resources to make social contributions or to support their minban teachers. There is a role for the central government to increase central education funds to these two provinces to: (a) ensure that minimum norms for the provision of education are met, and (b) to reduce the disparity in the provision of educa- tion between these two provinces on the one hand and other more economically developed provinces on the other hand. INEQUALITIES IN EDUCATION FINANCING Education Inegualities among Local Areas and among Institutions 4.48 Significant inequality in education financing is another prominent issues in primary and secondary sducation in Shaanxi and Guizhou. Both the physical observations during the visit and the data collected indicate significant disparities in education inputs for students in different areas. Key schools have much better facilities than non-key schools. Schools in urban areas are much better equipped and have better school buildings than schools in rural areas. Schools in economically more developed areas have better facilities than schools in economically less developed areas. Many of the disparities reflect differences in the resource base for financing common education expenditures at the local level. But, they also are derived from government policies on education, such as the policies of local financing, - 87 - diversification of financing with increased reliance on non-budgeted sources, the lack of government support for non-personnel expenditures in rural primary schools, the distribution of categorical grants and capital funds which excludes rural primary education, setting different expenditure standards for urban schools and rural schools, and so on. Within the context of a decentralized education finance system, such disparity can be reduced through larger equalization grants from higher-level governments, especially at the central and provincial levels. Policies that dibscriminate against rural primary schools can also be modified. 4.49 Differences in government compensation to teachers do not follow the distinctions among areas or institutions discussed above. Gongban teachers are paid according to schedules set by the central government and are deter- mined by qualifications, years of teaching experience, and other factors. Disparity in non-government income for gongban teachers can exist, due to difference in the ability of school to generate its own funds, and to differences in income-generation opportunities available to teachers in different areas. Inequalities between Gongban Teachers and Ninban Teachers 4.50 As explained in Chapters 2 and 3, the major inequality with respect to teachers lies in the different economic treatment of gongban teachers and minban teachers. It consists of the following: (a) Gongban teachers are officially employed by the government and their salary and other benefits total on the average approximately 100-110 yuan per month. They receive pension benefits when they retire. Minban teachers are not government employees, but are hired directly by the local community. They receive subsidies from the government, rather than a salary; these subsidies average about 40 yuan per month (38 yuan for primary minban teachers and 45 yuan for secondary minban teachers). When they retire, they have no financial support from the government, and this financial insecurity is a major concern for minban teachers. (b) Minban teachers also receive living subsidies from the local community. However, the amount of such subsidies can vary significantly among communities; the average is estimated to be 30 yuan per month (thus about 40? of total monthly income from the government and the community). Gongban teachers do not receive community living subsidies. (c) Gongban teachers have their residence registered in urban areas, but minban teachers are confined to rural areas. This leads to the following differences: (i) Urban residents have a variety of food subsidies which are not available to rural residents. These food subsidies consist of lower prices for (a) 13.5 kg. of major staple per person per month in the household; (b) .5 kg of cooking oil per person per month in the household; and (c) varying quantities of meat and - 88 - other food items per person per month in the household. For the average household, the food subsidies amount to about 70 yuan per month. (ii) Urban areas have better living conditions. Children of gongban teachers are urban residents and study in urban schools. Children of minban teachers are rural residents and study in rural schools. (iiI) Employment opportunities in urban areas are open only to urban residents. Gongban teachers thus have more alternative employment opportunities than minban teachers. 4.51 As indicated in Chapter 3, about 202 of all minba teachers have been converted to gongban status. However, the pace of conversion is affected by several factors. First, one has to consider the total cost of such a policy to the government and to assess whether the policy is financially feasible. Second, one has to consider whether or not the conversion will benefit students. The minban teachers visited by the mission are very dedicated teachers who put up with difficult conditions in the villages. Graduates from normal schools are often not willing to teach in rural areas; they would rather stay in urban areas which may already have a surplus of teachers. Even graduates who came from rural areas are often not willing to go back to serve their community. Also, the conversion policy may draw competent minban teachers away from rural schools into urban schools, thus aggravating urbanirural disparity. 4.52 An alternative would be not to convert minban teachers to gongban status but to improve their cmpensation. This includes at least two aspects: (a) A more regular, stable, and larger monthly income, consistent with local needs and financial conditions. The establishment of a people's education trust is certainly a positive step in this direction. However, poor areas may not generate as many funds as less poor areas. Thus, funds from higher-level governments (e.g., at the central, provincial, and county levels) for equalization and enlargement are desirable, subject to practical and financial limitations. (b) Provision for some form of financial security for minban teachers after retirement. Such security could be financed partly from the people's education trust and from government funds set aside for this purpose. Private Costs of Schoolins and Education Inequality 4.53 The high private costs of schooling are also a source of inequality in education opportunity between urban and rural children. In poor rural areas, the direct private costs of education are very high relative to house- hold income and are thus very burdensome to parents. For eample, in Taijiang county in Guizhou, household income averages about 600 yuan only (compared to an average of about 3000 yuan per household in urban areas) in 1989. The - 89 - direct private costs of primary education was about 102 of average household incoasg for secondary education, direct costs amounted to 16S of average household income without boarding and 40? with boarding. The proportion was even higher for households with below-average income. Child labor foregone could also be a major cost to rural households. The direct private costs of schooling and the cost of foregone child labor contribute prominently to the dropout problem in this county. Urban households, with their higher income, can better absorb the costs of schooling than rural households. For comparison purposes, note that the per-capita income in 1988 was 185 yuan for Taijiang county, 458 yuan for Qiandongnan prefecture, 598 yuan for Ansun prefecture, and 1972 yuan for Guiyang city. 4.54 Education administrators are very aware of the high costs of school- ing for parents. In fact, no tuition fees were charged in primary schools and lower-secondary in both provinces in 1989. Even though students have to pay other school fees, such fees are lower for rural areas than urban areas; they are also lower for primary schools than secondary schools. Schools fees are an important source of non-budgeted funds in primary and secondary education. Unless additional government resources are available, reduction in school fees will undermine expenditures on an already meager budget for non-personnel inputs. 4.55 Expenditures on textbooks constitute a significant part of total d'rect private cos- for parents but a very small proportion of government spending per student. It is recommended that free textbooks be provided for pupils in very poor local schools, on an experimental basis. A set of textbooks for 20 yuan which could last 3 yers represents less than 52 of government per student expenditure. It is also important to ensure that parents do not waste resources buying non-essential books. In the schools visited in both provinces, there were frequent observations of non-required textbooks and other learning materials forced upon parents by publishers. Parents can reduce their expenditures on textbooks by about 25-30? if they do not have to buy the non-required materials. Education administrators in Shaanxi have been frustrated in their recent attempts to deal with textbook publishers. Discussion is under-way among education administrators in Guizhou on how to tackle this problem. Equalization Strategies in Shaanxi and Guizhou 4.56 Education decision-makers of Shaanxi and Guizhou are not unaware of the inequalities discussed above. Both provinces have practiced a number of equalization strategies. They include: (a) In public finance, the flow of subsidies and surpluses between levels of government. (b) In education, the distribution of categorical grants with more favorable matching rates for poorer areas, and the distribution of categorical grants which are limited to disadvantaged areas only. (c) Exemption from surcharges and levies for the poorest areas, and lower rates of surcharges and levies for poorer areas, and - 90 - (d) In some counties, the pooling of part of the revenue collected at town level for use In the entire county. For example, in Louchuan county in Yanan prefecture, townsitownships are allowed to keep 80S of the rural education levy collected; the remaining 202 are sent to the county government for use in education in the entire county. 4.57 Finally, there is significant disparity in the utilization and financing of education by levels. Table 4.10 shows that compared to primary and secondary education, higher education has very high unit costs. As discussed in details in the chapter on higher education (Chapter VI), the high unit costs for higher education are due to inefficient utilization of education resources. Higher education serves a very small proportion of the total student population; but historically, their students not only have not had to pay tuition, they also have received living subsidies from the government. Cost-recovery schemes in higher education have only been the subject of experiment recently. School fees account for a much smaller proportion of the funding for higher education (about 1Z) than primary and secondary education (see Table 4.2). Further, most higher-education students are from urban areas, and thus, from households with above-average income. Children raised in rural areas have a much smaller chance of attending higher education than urban children. Vertically, the financing of education is regressive. RECOMMENDATIONS 4.58 Based on the study of the financing of primary and secondary educa- tion in Shaanxi and Guizhou, the following recommendations can be made for these two provinces regarding resource mobilization, resource reallocation among sub-sectors, equalization, and efficiency of resource utilization. 4.59 Recomnendations regarding resource mobilizationt (a) Continue increasing the proportion of government spending on education at each level of governmnt (central level down to county or town level) by 3-4? in the short term (say, within the next five years) and maintain that level afterwards. The goal is that, for the country as a whole, education expenditure approach 15X of total government spending in the near future. (b) Study the feasibility of legislation on minimum spending efforts to be undertaken by each level of governmet, taking into account variations and disparity among different regions. The central government needs to provide leadership in the study and in the legislation process that may subsequently be called for. (c) To keep schools in good condition it is necessary to increase the proportion of government capital funds allocated to education. Big increases may be difficult in the coming couple of years. But, the longer term goal is to achieve a substantial increase, say from 4-52 to around 8X. Meanwhile, it is important to gradually increase expenditure on maintenance of buildings. - 91 - (d) For both provinces, continue the process of decentralization of education financing and diversification of financial sources. Expand the efforts in mobilizing social contributions. Experiment with mechanisms for redistributing financial resources to benefit the poorest regions. (e) Significantly increase the amount of categorical grants for education, allocated from central and provincial to lower levels of government. Tne additional funds for such grants may comm. from surcharges or levies on the tax bases at the central and provincial levels. Shaanxi and Guizhou can move ahead with such action on their own. A study may be conducted by the central governmert about the economic and political feasibility of a national tax for education. Maintain the practice of distributing categorical grants on a matching basis. 4.60 Recommendations regarding resource allocation among sub-sectors: (a) Additional resources for education should be mostly spent on primary education. A major goal in education development is the universalization of primary education in both provinces and the objective of the focus on primary education is to achieve this goal earlier than what has been planned previously, while maintaining quality at the same time. Efforts are especially needed in reducing dropouts in primary education in Guizhou. (b) As categorical grants from central and provincial levels increase, spend part of the additional funds on couawn education expenditures of rural primary schools. (c) Use additional government funds from the central, provincial, and county level on improving the compenrtion for minban teachers, including a modest increase in monthly stipend and even more importantly provision of financial security after retirement. 4.61 Recoamendations regarding equity, poverty alleviation and financial redistributions (a) Significantly increase the amount of categorical grants that are targeted toward the poorest areas and minority areas. (b) Increase the amount of categorical grants from central and provincial levels and continue to distribute them on a matching basis to lower levels, with more favorable matching rates for poorer areas. (c) Wherever appropriate and without reducing local initiatives, expand the practice of pooling part of the funds collected from different areas at a lower level and distributing the pooled fund as equaliza- tion grants among the areas at the same level. For example, pool some of the revenue from surcharges and levies collected from towns and distribute the pooled funds among the towns for equalization - 92 - purposes. Allow a large portiont of the revenue to remain locally as an incentive for local collection. (d) Examine strategies for reducing the private costs of primary school in poor rural areas. Provide additional categorical grants for reducing the costs of textbooks and school fees for students from poor families. 4.62 Recomendations regardinR efficiencZ of resource utilization: (a) Improve the efficiency in the utilization of gongban teachers, especially with regard to distribution between rural and urban areas, the number of instruction hours, student/teacher ratios. (b) Reduce teacher training capacity and reduce the number of graduates from teacher-training institutions, to reflect the declining student population, resulting from the fall in the birth rate. (c) Reallocate the savings in personnel expenditures from improved teacher utilization and employment to essential non-personnel inputs such as library materials, teaching aids, and necessary school equipment. The long term goal should be the allocation of 101 of the education budget to non-personnel expenditures. (d) Create incentives for improving efficiency at the institutional and lower levels by establishing efficiency-oriented categorical grants from central and provincial levels; that is, schools and local governments that undertake changes to raise efficiency are provided with financial incentives for doing so. (e) Expand the training of financelaccounting personnel in both provinces, especially personnel at or below the county level and personnel from institutions. Provide training to personnel from institutions in the summer time. In minority areas in Guizhou, reduce the direct costs of primary schooling for female students and employing female teachers for teaching female students. - 93 - CHAPTER V: PLANNING OF UNIVERSAL BASIC EDUCATION IN GUIZHOU AND SHAANXI PROVINCES Introduction 5.1 The provinces of Guizhou and Shaanxi have undertaken elaborate and remarkably detailed planning efforts. The two provinces formulated 15 year plans (1986-2000) for primary, secondary and higher education. This was a national exercise, initiated in 1986. Guizhou was one of two pilot provinces chosen by SEdC for special study, and consequently, more informatton is available about planning in Guizhou than in Shaansi. This chapter highlights characteristics of individual plans and some of the differences in the planning process between Guizhou and Shaanxi. The description of the planning exercise is followed by analysis of the main issues in the Implementation. Although in both provinces the plans are well developed, recommendations are given to improve the process in the future. 5.2 Main issues of the planning exercise include: (a) Oversupply of teachers: the plans clearly indicate that there will be in China more trained teachers than positions avallable, but there are no recommendations to deal with this issue. There are no plans to restructure teacher training institutes so that they only train the teachers that are needed. (b) Funding: the growth of the budgetary resources in both Shaanxi and Guizhou was overestimated. It was assumed that the GNP would continue to grow by about 8S per year and that the education budget could grow 10? per year. Mission estimates show that budgetary increases of about 4? would be sufficient to achieve universal basic education, if adequate policies regarding teachers are adopted. (c) Girls enrollment: little attention is given in the plans to the constraints found in getting minority area girls into schools. (d) The issue of national norms: little efforts have been made to depart from national norms to meet local conditions. Although diversification was one of the basic objectives of the 1985 reform, conformity to national norms is still taken for granted and little attention is given to alternative norms in order to satisfy local needs. School size for example needs to be more diversified and attention needs to be given to one room schools in mountainous areas with low population densities. 5.3 The Guizhc.i and Shaanxi financial projections are compared with projections prepared by Beijing University and the Bank mission with different assumptions for enrollment and level of inputse The results show thatt (a) it is possible for both Shaanxi and Guizhou to finance universal education; (b) the variable which has the greatest impact on the level of resources required is the growth rate of the population; and (c) significant - 94 - savings can be achieved by a rational distribution of teachers and by paying attention to repetition rates in the primary level. Results also show that if the budget for education grows by 41 per year, and all additional resources are allocated to basic education, it is possible to achieve universal coverage by the year 2000. EDUCATION PLANNING 5.4 The planning process in the two provinces involved three general stages: (a) A survey of the physical facilities, financial resources and pupil- teacher ratios for the year 1986. This involved a collection of detailed figures for each village and township. Teachers visited every household to collect data on the number and age of children, and the literacy level and years of schooling of all adults under 40. The result was a remarkably detaled "List of persons to be educated.' Data Was also collected on the number of teachers. the number and size of schools and the physical state of buildings, which was used to compile a list of *dangerous buildings'. (b) Projections of the number of school age children to the year 2000, using figures provided by the Family Planning Advisory Committee. Estimates of financial resources available based on projections by the Economic Commnision, Planning Comussion and Bureau of Finance. Alternative projecti3ns were examined based on different assumptions about population. (c) Comparison of alternative scenarios for the successive attainment of: (i) universal 5 year primary education (in some backward areas the target was 4, rather than 5 years of schooling). (ii) universal 6 year primary education (iii) universal 9 year primary education. Next, the implications of these targets for the development of secondary education were examined, using alternative transition rates. 5.5 The basic parameters of the planning exercise included: the number of children by age, the enrollment rate, the repetition and promotion rate, the number of teachers required on the basis of fixed pupil-teacher ratios, the supply of teachers (calculated on the basis of the current supply, plus newly trained teachers minus those who retire, die or are transferred elsewhere) and projections of income and expenditure. The provincial government established the Lriteria for the allocation of equipment and space in sch"ools, using a three-fold classification system. The plan specifies how many schools should aim to satisfy these criteria in each 5-year period in the 15 year plan. - 95 - Guiding Principles 5.6 The Guizhou government set out the following more specific guiding principless (a) Development According to Conditions. This principle is concerned with feasibility. It reflected the Isapply-determinedO approach in the national exercise. Universal education was to be achieved gradually and taking into account the available resources. (b) Long-term Quality. The province tried to ensure that the long-term quality of education would not be compromised by the speed of expansion. (c) Starting from Basic Education. The province favored placing emphasis first and foremost on primary education. (d) Stability, or Smooth Transition. Great efforts were made to avoid fluctuation and to ease the adverse effects of unavoidable fluctuation. This is particularly significant in China where there are marked differences in the size of different age cohorts. Ce) Reliability. The plp-i underwent repeated feasibility tests. Cf) Flexibility. The authority insisted that decisions should be based on comparisons between alternatives. (g) Mobilization of Local Resources. New sources of funding were explored and identified. Ch) Planning and Decision by Levels. This is a principle of decentralization, so that education at each administrative level would be planned, financed and administered by the authority at the appropriate level, and the upper levels would step in only when necessary. 5.7 The general process comprised seven steps: (a) piloting in one county; (b) replication in other counties all over the province; (c) integration of local plans; (d) co-ordination and adjustments; (e) balancing and matching; (f) optimization; and (g) final decision. 5.8 General Survey and Prolection. The general survey provided a comprehensive set of indicators pertaining to items external and internal to the education system. The data were obtained by means of standard questionnaires completed by the county planners. The questionnaires followed a national standard format with local modifications. In Guizhou, a package of 18 questionnaires was sent to all counties. Data were collected separately for cities, towns and rural areas and for primary and junior secondary schools. _ 96 - 5.9 County planners were required to present three alternative schemes representing high, medium and low projections, and these were scrutinized by the county People's Congress. Under normal circumstances, the high and low plans were there to indicate the range of possibilities and hence to justify the medium plan. Normally, Scheme II (the medium) was adopted and presented to the higher level planning authority. 5.10 Demographic Projection. The projection of school age children combined two approaches: macro-projection and integration of micro-projections. Macro-projection, based on census data, projects the school age children for the entire province. Micro-projection is a county endeavor, based on three categories of data; (a) population born before 1982, using national census data; (b) population born between 1982 and 1986 (when the planning took place), using data in the Cultural Register (explained below); (c) population born in 1987 and after, using projections based on the data provided by the Birth Planniag Committee plus the observed surplus rate. 5.11 Teachers visited households in the school catchment areas and counted children of age 0-18 (in some cases 0-15). The central school keeps these demographic data in what is called a Cultural Register which records the particulars of all the children in the age group. In Gedong Primary Schools, Taijiang County, for example, each teacher was responsible for collecting data from ten families. The Cultural Register lists the following data: name of the parent, the child's name, nick-name, sex, year and month of birth, age. parent's education level, residential address and the unit in which the parent works. The education authority claims that the demographic data they obtained are more accurate than Security data which omits illegal residents and family- planning data, and does not include unregistered births. 5.12 The micro (county) projections were integrated and compared with the macro projection results. The two projection results roughly match, with the macro projection slightly higher. The macro projection was adopted as the basis for planning. 5.13 Size of the School System. In planning the size of the school system, three aspects were taken into considerations the size of the school population, class sizes and the geographic coverage of schools. In general the national norm for class size was followed; which ranged from 45-50 in urban junior secondary schools to 30-35 in rural primary schools. 5.14 Teachers. The planning of teachers involveds (a) survey of the stock; (b) projection of attritiont (c) expected training capacity and fluctuations; (d) calculation of teachers' work load (by subjects), curriculum requirements and staffing standards; (e) estimation of the annwal demand; (f) estimation of the annual demand of new teachers; and (8) estimation of the annual supply and training capacity. 5.15 Given the great disparity in class sizes between urban and rural schools, it is impossible to apply a unified norm of teacher-class ratio to all schools in the province. The Guizhou province, in the course of planning, stipulated its own norms of teacher-class ratio for primary schools: 1:7 for - 97 _ urban schools; 1:5 for rural center schools; 1:3 for village schools; and 1:1 for extension schools. 5.16 The results of the exercise are shown in Table 5.1. It was estimated that between 1986 and the year 2000, there would be a need for 72,925 primary school teachers and that the supply would average 4,862 teachers per year. As a result, there will be a surplus of about 11,000 primary teachers. The estimates show shortages in the supply of teachers up to 1995, and surpluses after 1996. 5.17 For junior high schools, the demand and supply was estimated by subject. For 1986, there were surpluses of teachers for the following subjects: Chinese, mathematics, physics, chemistry and labor. There were shortages for the following subjects: biology, English, history, geography, music and physical education. It was shown that the supply of teachers in some areas continues to exceed the demand while in other areas the supply is far below demand. In biology, for example, by 1990 there is a need for 2,700 teachers but only 1,290 have been trained. In mathematics, 1,000 redundant teachers are being trained. Table 5.1s PROJECTION OF PRIMARY SCHOOL TEACHERS Cumulative Number Annual Shortage or surplus Needed Supply in given year 1986 - 2990 27.664 5,533 1986: - 17,958 1991 - 1995 22,267 4,453 1990: - 12,188 1996 - 2000 22,994 4,599 1995: + 12.940 1986 - 2000 72,925 4,862 2000: + 11,822 5.18 Estimates showed that 54,000 full time teachers will be needed by the year 2000 for junior secondary schools. At present there are about 30,000 and rural colleges have a capacity to train 2,4000 per year. If 3Z retire each year or 1,600 a year, the existing capacity for training is adequate and does not need to be expanded. Adjustments need to be made, however, in the areas of specialization. 5.19 The norms for non-personnel expenditures and school facilities are shown in Table 5.2 and 5.3 respectively. In the case of school facilities, the national norms distinguish between three levels: Level I is regarded as 'minimum", Level II represents 'basic', and Level III, "above average.' - 98 - Table 5.2: PLANNING NORMS OF NON-PERSONNEL EXPENDITURES IN PRIMARY SCHOOLS (GUIZHOU) (Yuan/studentlyear) City Town Rural Administration 3.55-2.10 3.05-2.00 3.00-2.00 Teaching 4.15-3.20 4.00-3.00 3.75-2.50 Equipment 6.00-4.50 5.00-4.20 3.80-2.80 Maintenance 6.00-4.00 5.00-4.00 5.00-4.00 Others 1.30 1.40 1.50 Total 21.00-15.10 18.45-14.60 17.05-12.86 Source: Wu, Y.Y. et al. (1987) General methodology in planning basic education. Guizhou People's Press. p. 76 (Original in Chinese). Table 5.3: PLANNING NORMS OF PRIMARY SCHOOL FACILITIES (GUIZHOU) Level I Level It Level III Unit Books 30 25 20 volumes/student Teaching aids 4,100 2,500 700 yuan/school Building area 3.8 3.7 3.6 sq a/student Audio-visual 16,000 8,600 3,000 yuan/school Notes: Teaching aids assume schools of 12 classes; audio visual equipment assume schools of 18 classes. Building areas do not include quarters for staff families and student dormitories. Sources Wu, Y.Y. et al. (1987) General methodology in planning basic education. Guizhou People's Press. p. 76 (Original in Chinese) 5.20 Expenditures on building and maintenance were based on the building costs of 150 yuan per square meter in cities and 100 yuan in towns and rural areas. There were separate parameters for the capital expenditures for starting a new primary school of 12 classes, breaking down to item details. The total of such expenditures were 360,700 yuan for primary schools in towns and 277,900 yuan for primary schools in rural villages. - 99 - 5.21 It was assumed that depreciation of school buildings would be 2.5? per annum. Maintenance costs were estimated accordingly. Standards were also set to define *dangerous' buildings. RESULTS OF THE GUIZHOU PLAN 5.22 By the year 2000, 93.42 of the population should achieve universal 6-year education (in townships). Meanwhile, 401 of the provincial population should achieve universal 9-year education. In exceptional cases, mainly in ethnic minority areas, a target of universal 4-year education (rather than 6 years) was set. 5.23 The final goal is to achieve 9-year compulsory education for the whole province in 2015. As an interim target, the entire province should achieve universal 9-year education by 2007, while cities should achieve the same in 1995 and towns in 2000. 5.24 Coverage of primary schools should reach 97.52 in 1990, 982 in 1995, and 99? in 2000 (compared with 96.5? in 1986). Coverage of junior secondary schools should reach 79? in 2000 (compared with 74% in 1986). 5.25 Teachers. By 2000, 88? of primary and 80S of junior secondary school teachers should be qualified. That is, 88? of primary school teachers should have received training at senior secondary level and 80? of junior secondary school teachers should have undergone training at 3 year college level. Another 10? of primary school teachers should have obtained qualifying certificates. This has to be compared with the existing situation in 1986, when only 59? of primary and 35? of secondary school teachers were qualified. 5.26 In primary education, the proportion of qualified teachers would be achieved by (a) laying off some 13,000 unqualified teachers; (b) training other unqualified teachers (particularly those below age 45, some 34,000 in number); and (c) recruiting 60,000 newly qualified teachers. An alternative plan is to lay off 27,000 instead of 13,000, hence recruiting 73,000 instead of 60,000 newly qualified teachers. It was estimated that, in any case, an average of 2,200 teachers have to be trained by in-service courses each year. 5.27 For junior secondary teachers, some 3,000 unqualified teachers have to be laid off; 1,900 to 2,200 new recruits are to be supplied from 1984-2000. The supply has to be subject-specific, with the maximum demand in English (3,000-3,500) and smallest demand in chemistry, music and art (around 1,000). There is concern among authorities about the feasibility of these goals. It is known that laying off teachers is not easy. 5.28 Facilities. There are three standards set by SEdC for school equipment. By 2000, 52 of primary schools should achieve Level I standard; 35? Level II and 40? Level III in their teaching aid equipment (whereas in 1986, only 5.1? had basic equipment, many village schools had only rationed amount of chalk). Of all primary schools, 52 should poesess 30 books per student; 302 25 books and 452 20 books (whereas in 1986 the average was 1.15 books per student). 5X of primary schools should be equipped with - 100 - audio-visual facilities at Level I; 8S at Level II and 12? at Level III (in 1986, such facilities were almost non-existent). 85? of the primary schools should have reached the standard of 3.6-3.8 square meter of building area per student (in 1986, the average per student was 2.06 square meter). 601 of the primary schools should have fulfilled 50? of the required facilities for sports and recreations. Common expenditures per student should be raised from 6.3 yuan in 1986 to 29.7 yuan. Table 5.4 gives a brief summary of these planning goals. Table 5.4: PLANNING GOALS FOR PRDIARY SCHOOL FACILITIES BY 2000 (GUIZHOU) Level I Level II Level III Total Books 5S 30? 452 80S Teaching aids 5? 35? 40? 80Z Building area 85? Audio-visual 5? 8e 12? 25? Source: Wu, Y.Y. et al. (1987) General methodology in planning basic education. Guizhou People's Press. p. 47 (Original in Chinese). BESULTS OF THE SEAANXI PLAN 5.29 The Shaanxi planning exercise for education in the year 2000 followed more or less the same methodology used in the Guizhou exercise described above. The final plan was completed only in May 1989. It was less rigorous than in Guizhou. For example. Shaanxi followed the same practice of asking teachers to survey families in catcbment areas for children of 0-15, but records simllar to the Cultural Register in Guizhou vere not always available in the schools, and as a result the population projections are not very credible. Overall, the plan up to 2000 for Shaanxi is rather crude. 5.30 School-age Population. According to the Shaanxi plan, the primary school-age population will see a decline in the years up to 1992, from 3.3 million in 1986 to around 2.9 million in 1992. An increase during the period 1992-2000 is expected to raise it to 4.3 million by 1999. Bank estimates show a different picture with the school age population reaching a high peak of only 3.9 million by 1999. Differences are due mainly to different sources of data on population growth. Bank estimates assume a smaller population growth then Shaanxi Zducation Bureau estimates. 5.31 According to the government plan, the population for junior secondary schools will see a gradual decline until 1998 when the number will be around 1.4 million. There was an anticipation of slow growth in primary to secondary promotion rates, so that the fluctuation of school population would be manageable. Class sizes would be controlled (see Table 5.5) to stabilize - 101 - the number of classes (at around 26,000) until 1995 after which they will be increased. Further, the policy of setting up boarding schools for junior secondary students means that no new schools were anticipated at junior secondary level. Bank estimates show higher proportion of children in secondary schools, about 1.6 million in 1998. Thls is, of course, a matter of policy decision, and it basically depends on the proportion of primary school graduates allowed into secondary schools. Bank estimates maintain the proportion at current levels of about 702. 5.32 Repetition rates estimated by Shaanxi authorities differ subst&ntially from Bank estimates. Table 5.6 shows Shaanxi estimates for cities, towns and rural areas and Bank estimates for the province. The large discrepancy is in part a matter of definition. Bank estimates count as repeaters all children who stay in the same grade two consecutive years. Shaanxi estimates include only those children who fail the final exam and stay in the same school the following year. Table 5.5: NORM OF CLASS SIZE IN SHAANXI PROVINCE (Students per class) Cities Towns Rural Cities Towns Rural Primary - Shaanxi 40 30 28 45 30 28 Junior secondary 50 45 44 55 50 47 Primary - National 40-45 40-45 30-35 Junior secondary 45-50 45-50 40-45 Source: Shaanxi Planning Office for General Education (1989) Parameters and Methods for Planning General Education in Shaanxi, p. 14. (Mimeograph) Table 5.6: REPETITION RATES FOR PRIMARY CLASSES (SHAANXI) 1986-1990 1991-1995 1996-2000 Cities 7.5 5.0 4.0 Towns 8.0 6.0 5.0 Rural 8.0 6.0 5.0 Bank estimate 20.0 20.0 15.0 Source: Shaanxi Planning Office for General Education (1989) Parameters and Methods for Planning General Education in Shaanxi, p. 13. (Mimeograph) - 102 - Table 5.7: TIME-TABLE TO UNIVERSALIZE EDUCATION IN SHAANXI PROVINCE No. of t of cumulative No. of 2 of cumulative Townships population Z Townships population X 1989-1992 1,348 71.24 71.24 137 15.58 15.58 1993-1995 683 16.47 87.71 405 19.66 35.24 1996-2000 551 11.69 99.40 1,084 41.57 76.81 2001- 31 0.60 100.00 1,005 23.19 100.00 (Source: Shaanxi Planning Office for General Education (1989) Planning of General Education in Shaanxi, p. 13. (Mimeograph)) 5.33 Teachers. The planning norm for primary schools teachers was a teacher-class ratio of 1:3. This did not include the one-teacher schools in sparsely populated areas. Based on this parameter, it was estimated that there would be a demand for some 5,000 new teachers every year from 1989 to 2000. However, the annual output of the teacher training institutions would be 8,000. To avoid surplus, the Shaanxi policy was to lay off some 2,500 minban teachers every year. This seems to be unrealistic given that past experience shows that no teachers are ever laid off. Controlling admissions to schools would be a more realistic approach. 5.34 The government project for junior secondary teachers pointed to two kinds of demands. On the one hand, there would be a net demand of around 40,000 new teachers during the period 1989-2000, this would exceed the total output of 33,000 from teacher training institutions. On the other hand, there was an imbalance in the demand for different subjects, with an oversupply of mathematics and social studies teachers and an undersupply of biology and language teachers. 5.35 Funding. Teachers salaries and subsidies were estimated to grow at about 62 for gongban teachers and 32 for and minban teachers. 5.36 The norms for school facilities were as followss 15 and 30 books per student for primary and junior secondary schools respectively; a gradual improvement in teaching aids, desks and chairs, books, and audio-visual equipment. A depreciation rate of 2.52 was used in estimating renovation and reconstruction expenditures. 5.37 Table 5.7 shows the timetable prepared by Shaanxi as a result of the planning exercise. By the year 2000 all townships will achieve universal education. - 103 - GOVERMEN? COST ESTIMATES FOR THE DEVELOPMENT OF EDUCATION TO THE YEAR 2000 5.38 This section presents Government estimates of the costs required for implementing the plan for the development of primary and secondary education in each of the two provinces for the period 1989-2000. Estimates are given first for the base plan prepared by the government and then for a modified alternative plan prepared by the Bank mission and Beijing University. The key assumptions and parameters for the cost estimates are summarized in Table 5.8 and Annex 5.1. 5.39 Cost Estimates for Shaanxi. In 1988 in Shaanxi, expenditure on primary and secondary education from budgeted and non-budgeted sources amounted to 555 million yuan (see Table 4.3 in Annex 4.2). When capital funds for primary and secondary education were included, total expenditure on primary and secondary education equalled 614 million yuan. The Government Cost estimates shown in Table 5.8 and in Annex 5.1 indicate that 14.3 billion yuan would be available for educational developments in the twelve-year period 1989-2000. This sum corresponds to an average of 101 increase per year in total expenditure on primary and secondary education for each of the twelve years after 1988, which seems to be overestimated as explained below. 5.40 Key assumptions made by the provincial government regarding the financing of the plan includes (1) an annual growth rate of 8.4Z in GNP, (2) an annual growth rate of 7.8Z in government revenue, (3) an annual growth rate of 6.7Z in government expenditure, (4) an annual growth rate of 7.61 in capital investment funds, (5) an average of 2.71 of GNP devoted to primary and secondary education in the 19909 (up from 2.3Z in 1988), and (6) an average of 14.81 of government expenditure devoted to education (up from an average of 13.6Z in 1982-1987). In essence, the financing of the base plan depends both on economic conditions and on coamitment to education of government leaders at various levels in Shaanxi. In practice an annual growth rate of 101 for total expenditure may prove optimistic, given the more modest growth now expected for the 1990's and the budget deficits of most provincial governments. 5.41 An alternative plan was prepared by the Bank mission and it is summarized in Table S.8. The main difference with government plans ares (a) a more realistic school population projection; (b) more emphasis on lower secondary education, but no new construction of secondary schools; (c) more realistic numbers of teachers. Average annual growth of government budgetary allocation is only 6.61 compared to the government's estimated 102 and non- personal expenditures grow faster than personnel expenditures. 5.42 Table 5.9 shows a projection of total education costs for Shaanxi province reflecting proposals presented here with faster growth for primary (71) and secondary education (42) and no growth for higher education. The growth of 4Z for secondary education is estimated on the basis that lower secondary education would grow at about 72, in time with lehe growth in primary education, but upper secondary (including vocational schools) would have a modest growth of 12. This plan would allow the province to finance the universalization of basic education vith a modest overall growth rate of 4Z. Table 5.8t SEAANXI PROVINCE - COST PROJECTIONS FOR BASIC EDUCATION, 1989-2000 Government Plan Annual Growth Alternative - Annual Growth Primary + Lower Secondary Personnel Ependitures 9.1 billion 3.4 + 2.2 - 5.9 5.8Z Coimon Ed. Expenditures 2.0 billion 0.8 + 0.7 - 1.5 7.71 Improving School Facilities 1.9 billion 1.0 + 0.6 - 1.6 Construction 1.3 billion 0.1+0.1 - 0.2 Total 14.3 billion 10? 10.2 billion 6.6S Basic Assumptions in Annex 5.1. Sources Mission estimates. bl 5.92 FUTUMRE EDUCATION EXPEINURE OF SK X PVINCE (ml III on Yuan) Annal 1987 198 1698 190 1991 1962 199t 1994 1995 %of ld. e*p. Orco# (199t) Rate Total udgUtary Exp itndtur 8,760 S,981.2 4,060.4 4,262.0 4,4221.0 4,659.9 4,762.9 4p974.2 6,178.2 - 4X Total Education Expenditure 627.8 64.9 570.9 596.7 0170. 042.1 667.8 094.5 722.8 lOX 45 In ublch: Prlmry Education 14S.7 160.0 178.2 166.6 199.0 21.0 226.8 289.S 2C2.8 8 7X secormdry Eduation 187.2 194.7 202.6 210.6 219.0 227.6 286.9 24S.8 266.2 85x 4S Higher Education 51.9 51.7 51.6 51.4 51.2 51.1 30.9 50.7 50.0 7 0as Obher Eductlon 142 142.5 148.0 145.2 147.6 150.8 15.6 157.9 162.3 225 25 Note: Projection io based on tho 1967 Irea, acunming about 4X annual growth ti real tarm. . 106 - 5.43 Cost Estimates for Guizhou. Cost estimates for Guizhou province are shovw in Annex 5.10. The government plan provides estimates for the costs of compulsory nine-year education and the costs of upper-secondary education separately. Cost figures are calculated for the period 1987-2000. The total cost of primary and secondary education in Guizhou during 1987-2000 is estimated to be 9.5 billion yuan. 5.44 Thus the required cost for 1989-2000 implies an average annual growth rate of 6Z for each of the tvelve years after 1988. Agai.n, at a cursory level, the required annual growth rate is financially reasonable. As in Shaanzi, the financing of education during 1989-2000 depends on both economic conditions and comidtment to education of government leaders at various levels. The Feasibility of UnLversal Basic Education 5.45 The cost projections for Shaanxi and Guizhou suggest that the costs of achieving universal 9-year basic education are feasible, provided that provincial policies are consistent with the mission's assumptions, particularly with regard to stable, rather than increasing student-teacher ratios, and cost savings in vocational secondary programs. These projections, therefore, reconfirm the conclusion of the 1985 Bank study, *China: Issues and Prospects in Education' that the Chinese Government should be able to meet the recurrent costs of universal nine-year basic education, without increasing the share of the total government budget provided that the number of teachers and the costs of secondary education, particularly vocational schools, are carefully controlled. Eliminatins Financial Disparity Between Minban Teachers and Gonaban Teachers In Shaanxi Province, 1989-2000 5.46 There are two methods to eliminate financial disparity between minban teachers and gongban teachers. First, the government could provide add.1tional (equalizing) subsidies to minban teachers, without converting minban teachers into gongban teachers, with the community continuing to provide living subsidies. Second, minban teachers could be converted into gongban teachers so that the government provides all the compensation to minban teachers, including community living subsidies- The following section considers these two alternatives. 5.47 Equalization without conversion. In 1988, there were 93,246 primary minban teachers and 12,263 secondary minban teachers. Equalization in compensation can take place at different paces. To provide an illustration of the cost reqairement, it is assumed that equalization was completed in 1989. Equalization without conversLon requires 102 yuan per month per primary minban teacher and 105 yuan per month per secondary minban teacher. In 1989, the cost would amount to 130 million yuan. Since total expenditure on primary and secondary education in 1988 was 613 milllon yuan, the equalization cost would be equal to 212 of the total expenditure in 19881 Assuming a 51 per year increase in compensation over time, the total equalization cost for 1989-2000 is estimated to be 2.1 billion yuan; this cost will raise the total cost for the base plan (i.e., 14.3 billion yusn) by 14.4Z. The modified plan will then - 107 - the base plan (i.e., 14.3 billion yuan) by 14.42. The modified plan will then cost 16.4 billion yuan. The modified total cost implies an average growth rate of 11.52 per year for each of the twelve years after 1988, or 1.5 over the average annual growth rate for the base plan. 5.48 Equalization with conversion requires 132 yuan per month per primary minban teacher and 13S yuan per month per secondary minban teacher. Assuming complete conversion in 1989 (hypothetical illustration), the cost would have been 168 million yuan, or 272 of the total expenditure on primary and secondary education in 1988. Again, assuming a 52 per year increase in salary over time, the equalization cost for the period 1989-2000 is estimated to be 2.7 billion yuan; this cost will raise the total cost for the base plan by 18.6Z. The modified plan will cost 17.0 billion yuan, implying an average growth rate of 12.5Z per year for each of the twelve years after 1988. Eliminating Financial Disparity Between Minban Teachers and Gonaban Teachers in Guizhou Province, 1989-2000 5.49 Equalization without conversion. In 1988 in Guizhou, there were 70,545 primary minban teachers and 1,792 secondary minban teachers. The equalization cost for 1989 would have been 89 mil'Son yuan, or 18.6Z of the total expenditure on primary and secondary educat,on in Guizhou in 1988. Assuming a 52 per year increase in compensation over time, the equalization cost for 1989-2000 will be 1.4 billion yuan; this cost will raise the total cost for the base plan by 16.52. The modified plan will cost almost 10 billion yuan, implying an average growth rate of 82 per year for each of the twelve years after 1988. 5.50 Equalization with conversion. The equalization cost for 1989 would have been 115 million yuan, or 242 of the total expenditure on primary and secondary education in Guizhou in 1988. Assuming a 52 per year increase in salary over time, the equalization cost for 1989-2000 will be 1.8 billion yuan; this cost will raise the total cost for the base plan by 21.32. The modified plan will cost 10.4 billion yuan, implying an average growth rate of 92 per year for each of the twelve years after 1988. Costs of Raising Per-student Expenditures in Shaanxi and Guizhou to the National Average Levels, 1987 5.51 As indicated earlier, per-student (total) education expenditures on primary education and secondary education in both Shaanxi a>d Guizhou are lower than the average per-student education expenditure for the nation at the corresponding education levels. For primary education in 1987, per-student education expenditure was 60 yuan, 59 yuan, and 43 yuan respectively for the nation, Shaanxi, and Guizhou. For secondary education in 1987, per-student education expendituze was 141 yuan, 121 yuan, and 104 yuan respectively for the nation, Shaanxi, and Guizhou. In 1987, there were 3.4 million primary-school students and 1.8 million secondary-school students in Shaanxi. The equalization cost for Shaanxi would have been 39.3 millior. yuan in 1987. Since a tctal of 419.3 million yuan was spent on primary and secondary education in Shaanxi in 1987, the equalization would have cost an additional 9.42 in total expenditure on primary and secondary education. Guizhou, on the - 108 - other hand, had 4.6 million primary-school students and over 1 million secondary-school students in 1987. The equalization cost for Guizhou would have been 116.1 million yuan. Since a total of 409.2 million yuan was spent on primary and secondary education in Guizhou in 1987, the equalization in unit cost would have cost an additional 28.4Z in total expenditure on primary and secondary education. The equalization task is more difficult for Guizhou province than Shaanxi province. SELECTED ISSUES 5.52 The planning process, more than the results themselves was very valuable and worth the effort. At all levels of government, both in Guizhou and in Shaanxi, education authorities have realistic goals regarding the expansion and coverage of the educatiou system. They also have comnon goals regarding targets to be achieved during the coming years. 5.53 Some results are questionable because-the assumptions made were not always close to reality. Looking back, it is easy to see that assumptions about number of students, teacher salaries and growth of the economy are different in 1990 then they were predicted in 1986. The main recomiendation that can be made here is that Chinese authorities adopt computer simulation models that would allow consideration of a larger number of possibilities for each of the most important variables. Computer models would also allow updating of the plans on a yearly basis. Secondly it is recomended that through research the costs of education at village levels be analyzed in a systematic way. 5.54 We highlight five aspects of concerns funding levels, difficulties in achieving a higher level of girls" enrollment, national norms, equipment and teachers. 5.55 The estimated funding levels for both Shaanxi and Guizhou, as envisaged in 1986, proved to be too optimistic. Growth of the budget and growth of the proportion for education were both over-estimated (see para. 5.39). 5.56 Girls Enrollment and Attendance. There is little gender disparity in terms of school attendance in Shaanxi. In primary schools, girls' enrollment ratio in 1988 was 97.42, not significantly different from the overall enrollment ratio of 98.02. It is, however, a serious problem in Guizhou, where girls' enrollment percentage in primary schools was only 77.32 in 1988, compared with the overall enrollment percentage of 89.9Z. Girls' enrollment in Guizhou is the third lowest in the entire nation. Girls' attendance problems are especially serous in ethnic minority areas. For example, in Qiandongnan prefecture between the year 1984-87, only 272 of the girls who entered schools managed to complete the 5-year primary schooling. Those who managed were mainly among the urban population. The percentage of girls in China's total enrollment is only 37? on average, significantly lower than the world average of 452 and the Asian average of 432 (both UNESCO statistics). 5.57 The situation is more than a matter of school attendance. Females in many of the ethnic minority areas are traditionally illiterate. In the - 109 - 1982 national census, the illiteracy rate among 12 year olds and above Was 29.02 among males, but 71.52 among females. A breakdown into counties in Guizhou and Shaanxi reveal that even within Qiandongnan prefecture, disparity was great. The highest female illiteracy rate was 92.SS, in Congjiang; the lowest was 56.22 in the rather urban Sansui. It was encouraging, however, that the female illiteracy rate was lower among younger age-groups, 502 for girls below 20 years of age, whereas, it was over 702 for those older than 25 and 40 and above, over 802. Nevertheless, the corresponding male illiteracy rate for under 20 has fallen below 152. 5.58 Promoting an increase in girls' attendance goes against tradition. In Miao and Dong families, girls' talents are indicated by their skills in embroidery. Early marriage is another barrier; girls may be engaged as early as 8 or 9 years of age and this may make the engaged feel embarrassed to attend schools. Added to this is the sparse population and the consequent long travel to schools. Another crucial element is the private cost for sending a girl to school. Apart from the expenditures for purchase of books and stationery, parents have to pay for the salaries of the minban teachers; when parents are forced to make a choice, they will choose to send boys to schools first. The scarcity of female teachers poses another critical problem; parents are reluctant to send girls to schools where there is no female teacher. This is particularly a problem at higher primary grades when students are expected to live in school dormitories. 5.59 Guizhou and its prefectures have tried different means to improve girls' attendance. One of the most effective measures to improve girls' attendance has been to provide financial assistance. In Taijiang county the policy of providing girls with free schooling seemed to work in Gaowu Bilingual School, and there were more girls than boys in the classes. In Jingping county, some 4,060 yuan has been spent each year since 1983 to provide 16 poor townships and an additional 17 villages with free schooling for girls. The girls' enrollment ratio roie to 90.82 in 1987. Not only has the subsidy helped solve financial difficulties, but it has also communicated the message that providing education to girls is important. 5.60 Plans cannot be blamed for the problems of girls attendance. But more micro-research, i.e., research at very local levels, is needed to better understand the constraints that are found in getting girls to attend school and to include in future statistical and planning activity more specific means that relate to reasons why girls do not attend schools. The Issue of National Norms 5.61 Although diversification was one of the basic objectives of the 1985 reform, conformity to national norms is still taken for granted in planning. Diversification is realized in the different target goals and different speeds of development of the education system. Otherwise, little consideration is given to alternatives to national norms. This is the case in the planning for school building and school facilities, teacher qualifications and curriculum. 5.62 In the case of school building and school facilities, the State Education Commission has already taken into account diverse conditions and hence devised the 3-level system of classification. In Shaanxi and Guizhou, - 110 - however, it is evident that for the majority of rural schools, even achieving Level III is a remote possibility. In Shaanxi, grass-root village schools and extensions are simply absent from the plans for equipment improvement, while other schools are aiming at Level II by the year 2000. In Guiahou, there was great contrast in the same county between rural schools where even chalk is rationed and the key-secondary school which possesses 28 oscilloscopes. 5.63 On the other hand, unrealistic national norms may create difficulties which could otherwise be easily avoided. Heating in schools is an example. In Shaanxi, where temperatures may drop to -20C, there is no subsidy for heating provisions, simply because the province is south of the Yellow River and by national norms is not eligible for heating subsidies. 5.64 More experience with regional norms and more experience with planning at local levels will in the future result in more realistic assumptions and better overall results. 5.65 Equipment. Although plans include the provision of equipment, implementation fails on this point. In the rural areas, teaching aids and other school equipment are available only in key or center primary schools. Otherwise, they are simply absent. In many of the schools visited, blackboard and chalk are the only available teaching aids. 5.66 In addition to the scarcity of school equipment, what is available often consists of inappropriate items. Either they are too sophisticated to be educative at the particular school level, or they are not much utilized. There is, therefore, a conspicuous disparity in school equipment. On the one hand, there are schools which possess expensive laboratory equipment that is under-utilized or inappropriate. On the other hand, many rural primary schools have practically no equipment. In Shaanxi, primary schools are classified as rural, key and center. Rural schools are not included in the allocation of equipment funds and are not included in future plans for equipment. The problem here seems to lie in the fact that local equipment experts have no experience in procuring equipment and tend to select sophisticated apparatus instead of simple tools for children to use. 5.67 The prevalent practice is still to purchase school equipment accord- ing to standard lists handed down by the SEdC. There are local modifications, but since teachers are expected to use equipment items prescribed by the text- book, substitution or innovation is discouraged. Many schools have one microscope but no globes or maps, and nothing to see on the microscope. 5.68 Teachers. The planning of teacher supply and demand has always been a major problem in China. Teachers in China teach only one subject each at the secondary level; and there is subject specialization even at upper primary level. This has reduced flexibility in the deployment of teachers and added difficulties to the planning of supply. Added to the technical difficulties are the reluctance of trained teachers to teach in rural areas, and the tendency for teacher training institutions to produce teachers, regardless of the reduced demand caused by the falling birth rate. 5.69 A number of factors have made planning of teacher supply complex. First, there is a great disparity between rural and urban schools, and a - ill - simple overall teacher-pupil ratio does not give an accurate picture. Second, in order to stabilize the number of schools and the number of teachers, teacher-class ratio is used as the basic parameter for the planning of teacher supply. Third, teaching in an urban setting is attractive to normal school graduates, but it is difficult to attract teachers to many rural ares. 5.70 There is considerable evidence of a shortage of rural teachers. It is more serious in Guizhou where conditions are more difficult. In Taijing, for example, a single school is expected to serve three or four villages and this is one of the major reasons why there are not sufficient teachers to support more schools. There are also cases where one teacher has to handle two to four separate very large classes. 5.71 Although conversion is the basic policy towards the minban teachers, a faster process of conversion is prevented by two factors: finance and urban status. The Shaanxi province has created a new category of semi-gongban teachers who are qualified and receive similar salaries and benefits as other aongban teachers, but retain their rural status. Such a measure is a provincial innovation to help solve the problem. CONCLUSIONS 5.72 In both provinces the funding for education was overestimated. More moderate targets need to be set for the 1990's. Instead of a 0I annual growth of education budgets, we estimated that 42 per year would be sufficient to make primary education universal. 5.73 In both Guizhou and Shaanxi the issue of population statistics needs to be seriously revised once the new census data is out. Population growth is the variable that has the most influence on the cost of education. 5.74 The issue of teachers has to be addressed taking into account three important considerationst (a) numbers required, based on student-teacher ratios or on class-teacher norms; (b) salary and (c) status: minban or gongban. Teacher supply/demand projections show oversupply and a poor match between subject requirements and training courses provided. Minban teachers continue to receive a salary that is below substance levels and need to be adjusted. 5.75 This Chapter explores the possibility of converting all minban teachers to gongban teachers and shows that it is not financially viable in the short term. The alternative, recommended here, is to gradually increase compensation of minban teachers over time and provide them with some form of compensation after they retire. 5.76 National norms or equipment and construction standards should be related and adapted to local conditions. 5.77 Overall, the planning exercise carried out in the two provinces is a very good base for future investment decisions and provides sensible and rational base for predicting cost requirements. Funding levels need to be adjusted to the realities of the 1990's. - 112 - CHAPTER VIs HIGHER EDUCATION IN GUIZHOU AND SHAANXI PROVINCES Introduction 6.1 This chapter analyzes key issues in the management and finance of higher education for Guizhou and Shaanxi Provinces and examines the factors influencing the internal and external efficiency of their universities and colleges. 6.2 Given the severe financial constraints facing the education sector, the mwst urgent question facing higher education is how to increase efficiency and quality, in order to increase the supply and flexibility of high level personnel in response to changing economic demands. 6.3 There are two major problems in higher education at the provincial level. Some universities and colleges that are financed by the provincial government, rather thian central government ministries and authorities, are under-financed, leading to shortages of necessary equipment and very inadequate management information capacity. The cost of staff salaries in the provincial universities has accounted for an increasing share of total expenditure; a result of high rates of inflation in China in the past few years. This has exacerbated the problems of equipment shortages and has resulted in half-finished buildings and understocked laboratories and libraries. 6.4 At the same time, existing resources in many institutions are not well utilized. leading to high unit costs and low efficiency. The main cause of inefficiency is the excessive number of small institutions which are neither cost-effective nor provide their graduates with the skills and adapt- ability needed in a more open labor market. Because of their small size, their unit costs are high, while student-teacher ratios and utilization of physical facilities are low. Also, students are locked into narrow fields of specialization, not always appropriate for a rapidly changing economy in which more "generalists" will be required. 6.5 Thus, the problems of under-financing of some universities, coupled with low efficiency, poor utilization of resources, and excessive specializa- tion mean that the higher education system in these two provinces has been unable to meet the needs for well-educated manpower for their social and economic development. 6.6 This chapter considers possible solutions to these problems, includ- ing ways of making the higher education institutions more cost-effective, through internal reorganization of departments and courses, and consolidation of institutional capacity through mergers of small universities and colleges. Such measures could lead to improvements in both quality and efficiency, but would require additional capital expenditure in many cases. The chapter, - 113 - therefore, estimates the possible costs and benefits of a program of rationa- lization and consolidation of higher education institutions in the provinces and examines the feasibility of this policy, in light of various political and administrative obstacles. NATIONAL CONTEXT AND RECENT DEVELOPMENT OF HIGHER EDUCATION National Context of Higher Education Development 6.7 Chinese higher education has developed very rapidly in the past ten years, as a result of the high priority given to modernization and economic development. Enrollment in higher education rose from 1.0 million in 1979 to 2.1 million in 1990, while the number of universities increased from 633 in 1979 to 1075 in 1990. Figures 6.1 and 6.2 shov the growth of enrollments in higher education in China, and the increase in higher education institutions since 1980. Figures 6.3 and 6.4 show trends in the proportion of university and college graduates in the population as a whole and in the labor force. 6.8 During this period of rapid development, a nationwide reform in higher education has taken place. During the late 1970s and early 19808, -.igher education in China was over-centralized at the national level. Not only were student numbers tightly controlled, but the content of the curriculum, teaching plans and text books for each specialization were under the central control of the Ministry of Education. Such rigid administrative control over universities and colleges hampered the development of higher education by stifling initiative and creativeness and reducing the institu- tions' ability to respond to changing labor market requirements. As indicated earlier, this system of tight control has been changing significantly since the 1985 education reform. The objectives of the refom in higher education weres 'to change the mangement system of excessive government control of the institutions of higher education, expand decision making in the the state, strengthen the connection of the institutions of higher education with production organizations, scientific research organizations and other social establishments, and enable the institutions of higher educa- tion to take the initiative and ability to meet the needs of economic and social development.* - 114 - i4MAe E .2 Chinese Higher Education Chinese Higher Education Increase of Enrollment (1980-1988) increase of Colleges (1980-1988) (Mlwilion) Crhou,efd) 2~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.8 1 1.6 0.9 IA ~~~~~~~~~~~~~~~~~~~~~0.8 1.2 ' / / 0.7 1980 1981 1982W1983 1j94 i 1985 85 1087 11988 10 19801 199titi82 1986 194 198819 17 lWOj FN-..ber of 5tudent 11441t.279l t184 1.20 .l390.71 1.8 1.8U 0 2.0 Cotbp .67 O.7 0.15. 1.0 0t11.41O081078 -Numbef ot Student - Numbwo.f C00e0 8.fro. Chloe edWutten S itatt 80g Cel"ia ll.0 li śbwbooh. W198. amek, .-Figure 6.3 EiEgure-6.4 Chinese Higher Education Chinese Higher Education increase of College-Educated People Per Inorease of Colege Studets PW 10,000 in Labor Force (1980-1988) 10.000 peopIe in PpumlatIo (1980-1986) 40 t* - 14 201901 j=j93* 1q51S 19830 1981 1982 19ott83 198 1934 1988 1987 9 982 811 19 1 Number Of Studett 27.0129.222.4 25.8| 28 34.1.38.867.118.0 118 .7 11.3 1t.7 113.44 18.21 17.6816.3 18. - Number of student - Number ot Studeot ml om Pe3wS. Statco. so...t cChina EudwBtatl aiUsc wamfock. 1058. W"tbOI. 1966. - 115 - 6.9 In place of the Ministry of Education a State Education Commission tSEdO) was established in 1985. The SEdC is responsible for overall strategy for higher education, through the formulation of *policies, decrees and plans of the state", while finance and management of higher education institutions is the responsibility of central, provincial, county or district government authorities, depending on the type of institutions. The SEdC is responsible for national 'key' universities, the provincial governments are responsible for financing and controlling Normal Universities (for training secondary school teachers), provincial universities and colleges, while prefectural authorities are responsible for training institutions for junior middle school teachers, and a variety of post-secondary vocational and technical colleges. In addition, the education departments of other central ministries, such as the Ministries of Machinery and Electronics Industry, Railways, Metallurgical Industry, Labor, Public Health, and the State Planning Commission, all operate colleges for training their own staff. 6.10 In recent years, the State Education Commission has come to realize the seriousness of the problems of low external and internal efficiency of the universities and colleges, and the narrow fields of specialization. The main elements of national policy for higher education development in the next ten years (up to the year 2000) areI (a) Stabilize the size of total enrollment at its current level of about 2 million; (b) Rationalize the structure of higher education; (c) Raise the quality of instruction of higher education; (d) Improve the efficiency of the institutions. 6.11 The central theme of this policy is to control the speed of expan- sion and improve efficiency and quality of higher education institutions. In order to achieve this goal, the State Council of China issued an important document entitled Regulations on Establishment of Regular Higher Education Institutions which specifies the criteria and standards that a higher educa- tion institution should meet. It includes the requirements for the quality and quantity of physical and financial resources, faculty members and the minimum number of students, etc.. 6.12 Within this general framework, the shift towards increased institu- tional autonomy involved giving universities new powers and increased autho- rity tot (a) revise and introduce new courses of study within certain disciplines, (b) engage in research projects and consultancy services to industry, (c) allocate resources and appoint staff, and (d) 'sponsor' students, (financed at the expense of their employers or other sponsors), in addition to the students enrolled under state plans. The political events of 1989 may result in a slowing-down of the movement towards greater institu- tional autonomy and a strengthening of SEdC detenmination to limit the future growth of higher education. - 116 - 6.13 Since 1987, greater weight has been given to student choice in the system of job allocation for college graduates. Both employers and graduates now express their preferences in a 'two-way-selection" process, in which the employers are asked to specify job requirements and select graduates while graduates indicate their job preferences. Attempts are made to match the preferences through a job assignment system which gives students more autonomy in determining both the type and place of employment than the old system which simply assigned graduates to jobs without reference to their wishes. 6.14 This decentralization and devolution of responsibilities to lower levels has increased the potential flexibility and adaptability of Chinese higher education. It has made it more able to meet the increasing demand from the economy for qualified and specialized personnel and has helped to stimu- late the enthusiasm and initiative of individual universities and colleges, while promoting the efforts of the institutions to expand enrollments and improve academic standards. The 'two-way-selection' process of job allocation also provides an incentive for institutions to produce more flexible gradu- ates, in order to be more responsive to the changing technological require- ments and labor market demand in a rapidly changing economy. 6.15 The fact that universities and colleges are permitted to seek new sources of funding, through research, consultancy and sponsorship of students by employers, has encouraged some universities and colleges to run short courses to update the skills and knowledge of trained workers. 6.16 Some problems have, however, accompanied the decentralization process. Less developed provinces have fewer resources that can be mobilized for higher education than richer provlnces, which has led to very uneven development of higher education and growing disparities between the poorer and more prosperous provinces. There are also growing disparities between the 'key' national universities, financed from central government funds, and pro- vincial universities and colleges that are funded under the prefectural authorities. Figures 1 and 2 in Annex 6.1 illustrate the wide variations that exist in the level of per capita government expenditure and community and private donations for education in different provinces. The implications for higher education in Guizhou and Shaansi, two of the poorest provinces are examined in this chapter. First, however, we examine some of the main pro- blems and issues that have emerged at the national level since 1985, regarding the quality and efficiency of higher education. Problems and Issues for National Hiiher Education Policy 6.17 The World Bsank sector study an management and finance of higher education in 1986 identified a number of problems in the higher education system in China, and made recomnendations for overcoming these problems. The main problems identified includes (a) high unit costs, in comparison with other countries; the study found that, on average, the unit recurrent cost In 198? was 2.2 times GNP per capita in China compared with 1.0 on average in East Asia and the Pacific and 0.5 times GNP per capita in developed countries. - 117 - (b) Very low student teacher ratios, by international standards (an average of 3.7 to 1 in Chinese universities, compared with 12 to I on average in other countries in East Asia and the Pacific; (c) inefficient use of physical resources and inappropriate and inflexible space standards. (d) hiMh costs of student subsidies, including accommodation, food allowances etc. which accounted for 232 of total recurrent expendi- ture in provincial universities. 6.18 The study found strong evidence of economies of scales universities with enrollments of 3,000 or less had average unit costs considerably higher than those with enrollment of 6.000 or more. The report concluded that "in the absence of gains in internal efficiency and greater cost-sharing in higher education, there is a clear risk that the projected public costs of higher education could absorb too large a share of total public resources for educa- tion*. Recoumendations includet (a) Universities should seek to substantially raise the student-teacher ratio from the current level of 3.7 to 1 to at least 8 to 1 by 1990, with 12 to 1 as the ultimate target for universities in China. (b) Government should reduce the level of student subsidies in higher education vhile increasing selective support for qualified students from needy families. (c) universities should be encouraged to expand enrollments to at least twice the current average size. (d) measures to increase the level of utilization of facilities should be encouraged, in order to achieve more efficient use of classrooms, libraries, laboratories and equipment. (e) fiscal management and university organization should be improved, in order to create more clearly defined levels of responsibility and improve budgetary and accounting procedures. 6.19 Since 1986 some progress has been made in line with these recoamen- dations, but there are still serious problems of high unit costs and low efficiency in many higher education institutions in China. Table 6.1 and Figure 6.5 show that unit costs rose from 1,752 Yuan in 1980 to 2,564 (in current prices) in 1986, but then fell to 2,250 Yuan In 1988. Figure 6.6 shows unit costs expressed in terms of GOP per capita, which have fallen from 4 times GNP per capita in 1980 to 2.2 in 1987, but this is still very high by international standards. - 118 - Table 6.1: UNIT COST AND GNP PER CAPITA, 1952-1988 (Yuan) GNP Per Unit Cost/GNP Per Year Unit Cost Capita Capita 1952 830.00 N/A "/ 1965 917.68 1978 1,844.00 361.73 5.10 1980 1,752.38 439.29 3.99 1981 1,752.81 462.57 3.79 1982 1,922.43 495.91 3.88 1983 2,185.31 547.57 3.99 1984 2,228.59 650.87 3.42 1985 2,477.29 793.00 3.12 1987 2,314.70 1,022.36 2.26 Source: China Statistics Yearbook, 1988. 6.20 Student-teacher ratios, shown in Table 6.2 and in Figure 6.7 fell slightly between 1965 and 1982 when there were, on average only 4 students per teacher In higher education in China. Since then the ratio has increased only marginally to 5sl, which is still extremely low in comparison with the 12sl ratio observed in other developing countries in East Asia and also in many developed countries. Table 6.3 shows the student-teacher ratio and the average size of higher education institutions in 1988. The average size of most types of specialized colleges is 1,000 to 1,500 students, physical educa- tion, art and other specialized vocational colleges have fewer than 1,000 students on average, with student-teacher ratios as low as 2 or 3 to 1 in art colleges and language institutes. - 119 - aure Recurrent Unit Cost / GNP Per Capita (1962-1987) (RMB: Yuan In current prices) 3000 2800 2000 - 1800 - 1000 J 800 105219651W978198019811198219831064198619861987 Unit Cost aso 917 t844 1752 1762 1922 2186 228 2477 256 214 GNP Per Capita 1381 439 482149A16478 60 78a l8711022 j-Unit Cost - GNP Per Capita China Education Statistc los rbook,1988 China Statistics Therbook, 1988. Changes in Ratio of Unit Cost to GNP Per Capita (1978-1987) 6 4 3 2 1 0O 1978 1982 1988 1984 11061198819 Unit Cost/GNP 5.098 989 S.789 .A87T 3.991 8.424 3.124 2.888|2.264 Unit CostIGNP China Education Statistic Yearbook,1908 Ohbina Stti.ti. *arbook. 1088. - 120 - Table 6.2s HIGHER EDUCATION STUDENT-TEACHER RATIO, 1952-1988 Ratio Year Student to Teacher 1949 7:3 1952 7sl 1957 6X3 1965 4:9 1978 4:2 1979 4X3 1980 4:6 1981 5X1 1982 4sl 1983 4:1 1984 4:1 1985 5:1 1986 5:1 1987 5s1 1988 5:1 6.21 The proliferation of eml, highly specialized coll ges and univer- sities in the 1980's means that there are still severe problems of high unit costs and low efficiency throughout the higher education system in China. The SEdC is concerned about the problems of low efficiency and quality In small universities and colleges. In 1988, the SEdC began a project designed to improve the quality and efficlency of higher education institutions. Initially introduced on a small, experimental scale, nine provincial universi- ties were identified which were very small and of low quality. During 1989 one of these was closed and the remaining eight will not be permitted to admit new students until improvements are made. At the same time, the SEdC has established criteria regarding minimum size of universities, qualifications of teachers and norms for teacher-student ratios. It is planned to use these criteria as a basis for a consolidation program in the 1990's to improve effi- ciency and quality of higher education. - 121 - Table 6.3: NHUMIR OF HIGHER EDUCATION INSTITUTIONS BY TYPE AND S1ZE (AVERAGE ENROLLMENT) IN CHINA, 1988 Student Type Average I of Teacher Institution I of Inst. Enrollment Size Teachers Ratio Comprehensive University 49 241,581 4,930 45,646 5s29 Engineering College 281 732,941 2,608 147,045 4s98 Agricultural College 59 115,592 1,959 25,072 4361 Forestry College 11 18,168 1,651 4,416 4:11 Medical College 119 186,253 1,565 42,447 4:39 Nogml College 262 490,978 1,874 i6,419 6:42 Language Institute 14 15,021 1,073 4,765 3s15 College of Politics & Law 25 28,518 1,141 5,052 5s64 Physical Education College 16 13,366 835 3,376 3s96 Art College 30 12,477 416 5,361 2s33 Others 129 97,092 753 13,711 7:08 Total 1,075 2,065 1,922 393,185 5:25 The total number of institutions categorized by affiliations SEdc 36 254,926 7,081 52,946 4s81 Other Ministries 316 662,923 2,098 144,052 4s60 Provinces 723 1,148,074 1,588 196,187 5:85 Sources China Education Statistics Yearbook 1989. Fiagu6. Chinese Higher Education Student-Teacher Ratio (1962-1988) 7 8 - _ - 4 - 84 96 196 '196t 197 197i 198C 981 188198 1984 198C 1981 198; 198 Student/Teacher -7.317.1 6.3 4.9 4.2 4 .3 4.6- 6.t 4 4 4.4 5 5.1 .6l - Student/Teacher Source: China Edulcation Statistics Yearbook, 1988. - 123 - 6.22 The SEdC recognizes, however, that there are a number of problems associated with consolidation and rationalization of institutions and specia- lizations. There is. for example, a long tradition of extreme specialization in Chinese higher education, dating from the 1950's, when institutions were set up following the Soviet pattern of highly specialized universities, and highly centralized control of the curriculum, through Ministry of Education authorization of teaching plans, outlines and textbooks for each specializa- tion.11 Between 1965 and 1980, the total number of specializations approved by the Ministry of Education increased from 601 to 1039.21 Since 1985, the SEdC has begun a process of rationalization of specialitlies, intended to lead to a broader, more flexible definition of subject areas. Some universities have begun a program of curricular reform, including redefining and combining some of the specializations and courses and introducing a credit system.3/ Progress is still slow, however, and changes have mainly taken place in key universities in certain provinces. In general, the problem of very small, highly specialized institutions, with high unit costs, low student-teacher ratios and inefficient utilization of resources, remains widespread. 6.23 Another recent development is the introduction of fees in some universities. This limited attempt to introduce cost sharing, together with the fact that institutions are now permitted to enrol sponsored students at the expense of their employers, means that some universities have begun to tap new sources of income. But, once again, this affects only a minority of institutions, and is tending to result in wider disparities between provinces and between types of university (national, provincial and prefectural). 6.24 The mission found that the problems of low efficiency and high unit cost that characterize Chinese higher education in general were prevalent in higher education institutions in both Guizhou and Shaanxi province, and the following sections examine these problems in more detail and consider various possibilities for reform. PLANNING AND 7INANCING OF HIGHER EDUCATIuN AT THE PROVINCIAL LEVEL The Development of Higher Education in Guizhou and Shaanxi Provinces in the 1980's 6.25 Higher education in both Guizhou Province and Shaanxi Province has experienced a rapid expansion in the past ten years. Before the Cultural 11 The terms "specialization", *specialty' and 'speciality* are variously used in the Chinese literature to refer to a distinct professional specialism. 21 See R. Hayhoe, China's Universities and the Open Door. Ontario Institute for Studies in Education OISE Press, 1989, for an interesting account of historical trends in the organization of knowledge and the higher educa- tion curriculum in China, and an account of the recent reforms. 3I See R Hayhoe,op. cit., for a discussion of this process of curricular reform. - 124 - Revolution in 1966, there were only 6 higher education institutions in Guizhou with an enrollment of 6,232 students. Shaanxi had a relatively higher level of development in higher education during the same period with 21 universities and colleges with an enrollment of 18,203 students. During the Cultural Revo- lution (1966-1976), higher education suffered drastically in the two pro- vinces, as it did throughout the whole country. Since 1976, there has been a remarkable recovery and expansion. In Guizhou province, the number of higher education institutions increased from 8 in 1976 to 24 in 1989, and the enroll- ment from 8,286 in 1976 to 27,264 in 1988. In Shaanxi Province, the number of higher education institutions increased from 16 in 1976 to 49 in 1989 (includ- ing 29 national 'key' universities run by the ministries of the central government and 24 provincial and prefectural universities). Enrollment in Shaanxi increased from 25,662 in 1976 to 97,955 in 1988; this total includes 70,795 students at the national universities and 27,160 at the provincial and prefectural institutions. 6.26 Figure 3 in Annex 6.1 shows the rate of growth in enrollments in Shaanxi and Guizhou province, compsred with the average national rate of growth (expressed as an index, with 1980 - 100). Figure 4 in the same Annex shows the change in the proportion of college students in the total population in Shaanxi and Guizhou (expressed as a ratio per 10,000 population) compared with the national average. Figures 5 and 6 show the changes of proportion of the labor force with higher education in Shasanxi and Guizhou in comparison with the national profile (number of college graduates per 10,000 in the labor force). 6.27 In Guiz.hou Province all higher education institutions are the responsibility of either the Provincial or Prefectural governments, whereas in Shaanxi nearly half of the 49 higher education institutions are national universities. There are thus, considerable differences between the two provinces, in Shaanxi 72S of all students are enrolled in national universi- ties, financed by the central governmnt, whereas in GuirhQu all are in institutions financed by the provincial or local goverment. If the 25 national 'key, universities in Shaanzi are excluded, however, both provinces have 24 universities or colleges, which together enroll over 27,000 students. Table 6.4 gives the numbers of higher education institutions by type and affiliation in Shaanxi and Guizhou Province, and in China as a whole. - 125 - Table 6.4: NUMBER OF HIGHER EDUCATION INSTITUTIONS BY TYPE AND SIZE (AVERAGE ENROLLMENT) IN SHAANXI AND GUIZHOU PROVINCES, 1988 China Guizhou Province Shaauxi Province Type of t of Average J of Average I of Average Institution Inst. Size Inst. Size Inst. Size Comiprehensive University 49 4,930 1 2,753 1 5,539 Engineering College 281 2,608 2 1,799 1 1,677 Agricultural College 59 1,959 1 2,207 1 90 Forestry College 11 1,651 NA NA NA NA Medical College 119 1,565 4 1,010 2 1,321 Normal College 262 1,874 10 998 10 1,175 Language institute 14 1,073 NA NA NA 1,271 College of Politics & Law 25 1,141 NA NA NA NA Physical Education College 16 835 NA NA NA NA Art College 30 416 1 177 2 389 Others 129 753 3 993 4 870 Total 1,075 1,922 24 1,136 24 1,151 Sources World Bank Mission Questionnaire 1989. - 126 - 6.28 The universities in both Guizhou and Shaanxi are mainly financed by the provincial government. More than 95 of their funding comes from govern- ment appropriations. Because the academic levels of these provincial univer- sities is relatively low, they are unlikely to generate much revenue by conducting research projects sponsored by the government, industries or foundations, as the national universities are encouraged to do. However, the Mission found several examples of contract research in universities and colleges in both provinces and this is likely to become more important as a source of income in the future. 6.29 Higher education in these two provinces, as in China as a whole, used to be free of charge until 1988, with all college and university students receiving free tuition and accommodation. In the normal colleges, which train middle school teachers, students also received stipends to cover the cost of meals and other living expenses. Starting in 1989, universities and colleges in the two provinces started to charge tuition fees of 200 Yuan per year. Institutions are permitted to keep all the income collected from tuition fees, and use it to improve the living and learning conditions of their students. In both provinces universities plan to increase the level of student subsidies while increasing selective support for qualified students from needy families. 6.30 The development of higher education in Shaanxi and Guizhou has been slower than in China as a whole, because of the relative poverty of the provinces limited fi-iancial resources available. Until 1983 the rate of growth in higher education enrollments in Guizhou was very close to the national average (7.3Z, compared with 7.42 in China as a whole). Since 1983, however, the gap between Guizhou and the most prosperous provinces has been increasing. The average rate of growth of enrollments in Guizhou has been only 9.21, compared with 112 in China as a whole. Figure 4 in Annex 6.1 illustrates the widening gap between the number of students per 10,000 of the population in the two provinces and in China as a whole. Future Develoiment of Hiaher Education 6.31 The provincial manpower projections for Guizhou for the period 1985 to 2000 indicate a total demand for 233,000 graduates from higher education institutions, including 3,000 post-graduates with Masters' or Doctoral degrees, 90,000 graduates from four-year programs and 140,000 graduates from two or three-year programs. The current capacity of higher education institu- tions in the province, however, will produce only one quarter of the required number of four-year college graduates and only lO of the required number of two or three-year graduates. The provincial government has, therefore, embarked on a policy of expansion for the nine largest universities or colleges, which provide four-year degree level courses. These are the best equipped and highest quality institutions in the province, and are regarded as the main priority for capital expenditure. All nine institutions currently have building programs and the provincial government has spent 40 million Yuan since 1985 for their expansion. The current five-year plan aims to allocate 20 million Yuan a year, and by 1992 the provincial government plans to have spent 100 million Yuan on these nine institutions, to provide additional classrooms, laboratories and libraries. The plans also include an allocation of 4 million Yuan a year to the 9 teacher training colleges, but the - 127 - provincial government requires a 'matching' contribution of 4 million Yuan a year from local resources. Target enrollment figures would mean that total enrollment in the 9 larger universities and colleges would increase by 602 between 1988 and 2000, and by 202 in the teacher training colleges. No targets have been set for the six small vocational colleges. 6.32 In Shaanxi there is also a considerable gap between projected demand and supply of highly qualified manpower. Because of the existence of 25 national 'key' universities and colleges administered by central government ministries, the province is in a more favorable position than Guizhou, since some of the graduates from these national universities will be allocated to work in the province. Nevertheless, the overall supply of college graduates (including graduates from both provincial universities and national universi- ties) will not be sufficient to meet the projected demand for college gradu- ates in the province. Recent manpower projections indicate that Shaanxi will need 40,000 college graduates a year to the year 2000, but the current supply (including from national and provincial universities) is only 21,000. The provincial authorities are currently preparing a development plan to expand enrollment and reduce the gap between supply and demand. Priority will be given to the development of the existing universities in Hanzhong, Yanan and Guanzhong areas. 6.33 The changing conditions in the labor market as a result of the economic reforms affecting both agricultural production and industrial enter- prises, mean that the accuracy of these manpower projections is open to ques- tion, but there is already evidence of a shortage of high level manpower in the two provinces, and the economic development plans of the provincial governments justify further expansion of higher education. However, it is vital that graduate manpower should be flexible and able to respond to ch}ng- ing demands and new technologies. 6.34 In the past, expansion of higher education has resulted in the crea- tion of highly specialized courses and institutions, and expansion in Shaanxi and Guizhou took place without the state or provincial authorities paying sufficient attention to the issues of economies of scale or cost effective- ness. Thus, the number of universities and colleges, the number of specialties and the number of staff expanded more rapidly than enrollment. Subsequently, many very small universities were established, and with them, a relatively high cost system evolved, with low utilization of both staff and physical facilities. The problems of low external and internal efficiency and high unit costs in universities and colleges in Guizhou and Shaanxi, are examined in the following sections. A number of options are explored for increasing the efficiency and quality of higher education institutions and the flexibility of graduate manpower. INTERNAL AND EXTERNAL EFFICIENCY ISSUES IN GUIZHOU AND SHAANXI 6.35 on the basis of the discussions with provincial government authorities, staff in higher education institutions and visits to universities and colleges, the mission has identified problems of both internal and external efficiency in Guizhou and Shaanxi. - 128 . Internal Efficiency Issues 6.36 There is a general problem of low efficiency in higher education in the provinces, due to four main factors: a) low teacher-student ratios and high unit cost; b) small size of institutions; c) highly specialized courses, which result in small class size, low utilization of specialized equipment and low teacher-student ratios; d) low utilization of classrooms and laboratories. Unit Costs 6.37 In both Guizhou and Shaanxi the average unit costs of higher educa- tion in 1988 were above the national average of 2,250 yuan per student. In 1988, the unit cost was 2,441 yuan per student in Guizhou, and 2,301 yuan in Shaanxi, higher than the average for China as a whole and considerably higher than the average in other developing countries in Asia. Until 1986, the trends in unit costs in the two provinces were fairly similar to the national average as Figure 6 in Annex 6.1 shows. Since 1986, however, unit costs at the national level have fallen from 2,564 Yuan to 2,250 Yuan in current prices but, in Guizhou and Shaanxi they have continued to rise (though declining in real terms). In view of the limited financial resources in the two provinces, therefore, the costs of higher education represent a greater burden in Guizhou and Shaanxi than in other, richer provinces. 6.38 One reason for this is the exceptionally low student-teacher ratio in many small colleges or departments. For example, a very small college in Shaanxi, Yulin Agricultural college, has operated at unit cost of about 5,000 Yuan per student per year, which is more than twice the national average. The high unit costs reflect high levels of expenditure of staff salaries, due to the low student-teacher ratios. The mission's analysis of the structure of recurrent costs per student, shown in Figures 8 to 14 in Annex 6.1, reveals that, whereas, in China as a whole and in the national universities in Shaanxi, expenditure on staff salaries and other personnel costs account for under half (42X) of all recurrent expenditure (Annex 6.1, Figures 8 and 9), in Guizhou, and in the provincial universities in Shasaxi, staff costs account for 55-58Z of total recurrent costs (Annex 6.1, Figures 10 and 11). Non- personnel costs are extremely high in Chinese universities, compared with other countries, since they include costs incurred in activities that are not classified as *higher education* in other countries; for example the costs of university publishing and printing activities, schools and hospitals for university staff, etc. This makes international comparisons of costs and expenditure on higher educatXm very difficult, and explains why staff salary and other personnel costs account for a much smaller proportion of total expenditure on higher education in Chinese universities than in other developing countries. 6.39 Expenditure on the salaries of teaching faculty and research staff accounts for about 37? of total personnel costs (including student subsidies) in both provinces. The share of administrative staff and service workers (1OZ) is also the same in both provinces, bQ. the proportion allocated to student subsidies is greater in Guizhou (262) than in Shaanxi (212), however, Shaanxi allocated more to university press and faculty personnel than Guizhou - 129 - (62 compared with 2.52). The costs of staff employed in primary and secondary schools for children of university staff and the university hospitals account for 3-4Z of total staff costs in both provinces. (Annex 6.1, Figures 12 and 13). 6.40 The distribution of personnel costs in the two provinces is thus broadly similar, but there are significant differences in the distribution of non-personnel costs (Annex 6.1, Figures 14 and 15). Expenditure on instruc- tion (including materials) accounts for nearly one-third of non-personnel unit costs in Guizhou, while in Shaanxi the costs of instruction are less (271) although, if the costs of books and journals are included, the total costs of instruction and libraries account for about a third of recurrent non-personnel expenditure in both cases. The costs of administration are much higher in Guizhou (37?) than in Shaanxi (232), while universities in Shaanxi spend considerably more on research and development than those in Guizhou. Another significant difference is in the proportion of non-personnel expenditure devoted to building maintenance, which is 15? in Shaanxi but over 201 in Guizhou. 6.41 Size of Institutic-As. In both provinces there are several very small colleges with only a ew hundred students, and the average size is only about 1,000. In Guishou t ere are 6 colleges with an average size of 360, and in Shaanxi there is a coliege with an enrollment of less than 100 students. This leads to very high administrative cost per student. Table 6.4 shows that the size of the provincial universities in Guizhou and Shaanxi is considerably below the national average. The average size of the provincial universities in Shaanxi and Guizhou is quite similar (about 1,100 students) but the average size of the national universities in Shaanxi is 2,832, slightly above the national average of 2,607. Annex 6.1, Figure 16 shows the trends in average size of higher education institutions in Guishou, Shaanxi and in China as a whole, since 1980. There has been a gradual increase in the average size of universities and colleges in China as a whole, since 1983, and in Shaanxi since 1984, but in Guizhou the average size fell in 1984 and has remained around 1,100 for the past few years. 6.42 Specialization of Courses. Many institutions are highly special- ized, with only a single class in each specialty. In the provincial universi- ties of Shaanxi the average size of each subject specialty is 134 students, which means that the annual enrollment is about 40, far below the minimum enrollment of 60 required by SEdC guidelines. In Guizhou, there are 226 specialties and almost all of them enroll a single class; in fact some enroll a single class every two years. Therefore, the student-teacher ratio is very low and teachers' workloads are also very low. For example, in Shaanxi the average teaching load of teachers in higher education institutions was only 4.8 hours per week in 1988 and, throughout the 1980's, student-teacher ratios have been below 5:1 in both provinces (Annex 6.1, Figure 17). Even in the larger universities there are very highly specialized courses. In Guizhou Institute of Technology, for example, there are 26 specialities, although the total number of students is only 3,281. There are separate courses in organic and inorganic chemical engineering and chemical engineering, each with fever - 130 - than 100 students, and three separate courses in mechanical engineering. This results in low utilLzation of specialized equipment and low teaching loads for many university teachers. 6.43 Low Utilization of Classrooms. The high degree of specialization leads to low utilization of equipment and laboratories, but there are other factors that result in low utilization rates. For example, in some colleges, the time table means that laboratories are used only in the afternoon, and there are classrooms and laboratories that are actually used only for a few hours each week. In both Shaanxi and Guizhou many laboratories in univer- sities and colleges are used less than ten hours per week. In a small college in Northern Shaanxi, the laboratories are used less than one hour per week on average. External Efficiency Issues 6.44 The highly specialized nature of Chinese higher education also leads to low external efficiency and there is evidence of a mismatch between demand and supply of highly qualified manpower, and education workers often lack flexibility and ability to respond to new technology. 6.45 Mismatch between Demand and SUPPly. Despite the highly centralized planning of higher education enrollments on the basis of manpower forecasts and assignment of graduates that has characterized higher education in China for so long, there is evidence of considerable mismatch between demand and supply, particularly since the economic reform of agriculture and industrial enterprises. In Guizhou, there are 100,000 college graduates employed in the province, but a survey by the Institute of Educational Research of Guizhou showed that 40,000 were in jobs unrelated to their qualifications. Current projections of teacher demand and supply show a surplus of 3,897 teachers of Chinese, mathematics, physics and chemistry, and a shortage of 4,000 teachers of biology, English language, history and geography. Some graduates take a considerable time to find jobs, while there are reported shortages in the service sector and in scientific, technical and managerial jobs. 6.46 Lack of Flexibility. The higbly specialized nature of courses contributes to the mismatch between demand and supply by producing workers with very little flexibility. This is particularly serious since the recent economic reforms mean that strict manpower forecasts are even less likely to be accurate than in the past. WAYS TO IMPROVE INTERNAL AND EXTERNAL EFPICIENCY 6.47 There is evidence that some provincial government officials and university staff in both provinces have become increasingly aware of these problems of internal and external inefficiency, and are beginning to discuss or to seek possible solutions. This section summarizes the policy options, and gives examples of some of the possibilities and proposals being considered in Guizhou and Shaanxi to improve efficiency through internal reorganization, rationalization of specialities and courses, and mergers and consolidation of institutions. - 131 - Ways Of Improvina Internal Efficiency 6.48 Internal reorganization to rrtionalize small departments, eliminate duplication and make more effective use of staff and physical resources would increase cost effectiveness, reduce student-staff ratios and unit costs. Some higher education institutions in both provinces have already begun to esamine possibilities of internal rationalization. For esample, Guishou Institute of Technology is considering combining three separate cou ,es in chemical engineering and three in mechanical engineering. Not only would this lead to a broader curriculum, but it would improve utilization of laboratories and equipment. 6.49 There are other ways of improving utilization of expensive equip- ment. Arrangements whereby institutions or departments could share equipment are uncommon, because of difficulties of transportation and because of the highly specialized nature of most of the institutions. However, some examples of *double shift' laboratory sessions were observed. In some cases, rela- tively modest capital expenditure in libraries, to improve cataloguing and information retrieval could increase efficiency, but in most cases libraries have insufficient funds to buy books or Journals and cannot contemplate capital expenditure. Nevertheless, it is important to explore ways of Improving utilization of physical facilities. 6.50 The previous World Bank Sector study on Management and Finance of Higher Education found strong evidence of economies of scale in Chinese universities, but this concept is not well-understood in higher education institutions. In many cases it is assumed that doubling enrollment will require a doubling of staff and physical equipment. This is partly due to the use of inappropriate space standards in the past, as well as the low student- teacher ratios and low teaching loads found in many universities and colleges. However, some universities are now attempting to increase student-teacher ratios. Guizhou Institute of Technology has produced plans and proposals which would increase enrollment from 3,350 to 5,000 students and raise the student-teacher ratio from 4s5 to 7X5. This is still low by international standards, but it is clearly a step in the right direction. 6.51 The most significant opportunities for achieving economies of scale lie in merging or consolidating small institutions. This could considerably reduce unit costs, by reducing tbe costs of administration and services and by reducing student-staff ratios. It would also present a number of difficul- ties, which are examined in the following section, but the Mission found welcome evidence of a willingness to consider plans for consolidation and mergers between institutions. 6.52 The Higher Education Bureau of Shaanxi Province has already prepared seven proposals for consolidation of small universities and colleges includings (a) merging 8aoji University and Baoji Teachers College in West Shaanxi, (b) merging Shaanxi Institute of Technology and Hanzhong Teachers College in South Shaanxi, - 132 - (c) merging Xian Musical College and Xian Fine Art College into Shaanai University of Arts in Xlian, (d) merging Xian Foreign Language College and Xian Teachers College of Foreign Language in Xian, (e) merging Yulin Teachers College and Yulin Agricultural College in North Shaanxi, (f) merging Yanan University and Yanan Medical College in Yanan, (g) merging Weinan Teachers College and Veinan Educational College to form a single college in Weinan. 6.53 In a few cases, there have been attempts to estimate the possible costs and benefits of such mergers, which are examined in more detail In the following section and Annex 6.2, which include estimates of the savings that could be generated by merging Baoji University and Baoji Teachers College in west Shaanxi. 6.54 There are several other proposals currently being considered in Shaanxi. For example, In South Shaanxi there are three small colleges, with student enrollment of 1,741, 1,353 and 300 and staff numbers of 598, 980 and 125 respectively, giving student-staff ratios of 2:9, 1:3 and 2s4 if all administrative and service staff are included. A proposal has been put forward to merge these three colleges, which in the long run could lead to a reduction of 252 in the number of teachers and 382 in total staff numbers. 6.55 The Mission found other examples In both provinces of possible mergers in the future. In Shaanui, a small provincial agricultural college, with an earollment of less than 200 students, has costs of about 5,000 yuan per student which is higher than those of the national key" universities in Beijing, and considerably higher that the average costs of higher education institutions in other developing countries in Asia. At the same time there is a national agricultural university with spare capacity vhich could be utilized to produce more agricultural specialists for Shaanxi Province at lower cost. A similar situation exists regarding the training of engineers for light industry. If more student dormitories were built at the national university, Northwest University of Light Industry, it would be possible to increase the supply of engineers for the province at low marginal cot. 6.56 In Guizhou there are similar candidates for uerger. The presidents of a small college of civil engineering and the Institute of Technology have discussed the possibility of a merger, and are both strongly in favor of a merger on grounds of efficiency and quality. The reductions in unit cost that could be achieved if the two institutions were combined on a single campus, with savings in both teaching and administrative staff salaries, would result in a significant improvement in internal efficiency. 6.57 The success of consolidation and rationalization measures depend, bowever, on a willingness to overcome logistical and administrative problems. Same of the obstacles to consolidation are examined in the section, on feasi- - 133 - bility of Increasing efficiency of higher education institutions through a program of consolidation and institutional mergers later in this chapter. Ways of Improvina External Efficiency 6.58 Internal reorganization of higher education institutions could also help to increase external efficiency by reducing the narrow specialization of courses. The Decision on Educational Reform of 1985 gives universities greater autonomy in the organization of the curriculum and the definition and content of different specialties. The main challenge is to organize profes- sional specialties and to adjust enrollment plans to take account of the more open conditions in the economy. These more open conditions have increased the scope for mobility of university graduates and made past manpower forecasts, based on fixed co-efficients and the old system of job assignment, unsuitable as a guide to future manpower demand. Nothing has yet been put in the place of the old manpower plans, however, and fixed co-efficients are still used to estimate the need for agricultural technicians or engineers, for example. Thus, the plans for expansion of higher education in Guizhou and Shaanxi are still based on manpower projections, but the provincial authorities and the universities themselves are anxious to increase flexibility and to take account of emerging needs in the labor market. 6.59 For example, Guizhou Province has formulated long term plans to develop its economy through greater exploitation and utilization of mineral resources, with which the province is well endowed. Guizhou Institute of Technology has drawn up plans to contribute to this process by expanding student numbers from 3,359 to 5,000 and develop a number of new courses within four new broad disciplines: Energy Science and Engineering, Geological Science and Engineering, Materials Science and Engineering and Mechanical Science and Engineering. At present, the Institute has 16 departments and 26 specialties and offers 414 different basic or specialized courses for 3,359 full-time students and 519 part-time or correspondence students (shown in Annex 3, Table 1). The Institute is currently considering reorganizing the departments in order to merge very small specialties and increase the flexi- bility of their courses. This would, in turn, increase the flexibility and adaptability of their graduates. 6.60 Another aim should be to further develop in-service training and courses linked with industry. Guizhou Institute of Technology plans to expand the number of evening course and correspondence students, and hopes to set up a Center for Continuing Education in Engineering, which would contribute to the economic development of the province through updating the knowledge and skills of technical personnel already employed in industry. 6.61 Similarly, Guizhou Agricultural College is planning to expand provi- sion for part-time and correspondence students, in order to update the skills of agricultural technicians already employed in the province. In 1988 there were 17,235 agricultural technicians employed in Guizhou, and only 252 had any formal training in agriculture beyond secondary school. Guizhou Agricultural College plans to expand the number of full-time students from 2,424 in 1988 to 5,000 and the number of correspondence students from 100 to 600. There are - 134 - also plans to start short intensive In-service training courses for agricultural technicians and farm workers. COSTS AND BDNEFITS OF INSTITUTIONAL MERGERS AND CONSOLIDATION 6.62 Some of the proposals for Internal reorganization and consolidation of institutions have attempted rough estimates of likely costs and benefits. Annex 6.2 estimates the costs and benefits of a merger between Baoji University and Baoji Teachers College, which could be combined to form a single comprehensive university, consisting of five faculties, or broad subject areas (Science, Engineering, Medicine, Arts and Humanities, Education and Management). At present Baoji University has only 505 students and Baoji Teachers College has 1,887 students taking three or four-year teacher training courses. The student-staff ratios are 3s8 in 8aoji University and only 3:1 in Baoji Teachers College, if all administrative and service staff and workers are included. The student-teacher ratios are also low: 5:3 in the Teachers College and 6s3 in Baoji University (including assistant teaching staff). 6.63 If the College and University were combined, to form a single comprehensive university with a total enrollment of 2,392, the provincial authorities estimate the student-staff ratio could be increased from 31 to 4:4, the student-teacher ratio from 55 to 6s6, and unit costs reduced from 1,927 to 1,732 yuan per student, a reduction of just over 1O2. This would represent a modest improvement in efficiency, but more significant savings could be achieved if the university expanded to take a total of 5,000 students and the student-staff ratio was further increased to 6:1 and the student- teacher ratio to 12:l. This would mean that unit costs would fall to 1,411 Yuan, a reduction of nearly 272. 6.64 The provincial government estimates that additional capital expendi- ture required to achieve this consolidation would be about 34 million yuan (including new laboratories, equipment and a computer center). The savings of staff salaries resulting from a 27Z reduction in unit costs and an annual enrollment of 5,000 students would amount to 2.6 million Yuan a year. Thus it is possible to make a rough comparison of the costs and benefits of the proposed merger and consolidation. The initial cost savings from the merger would not be substantial, since there is little overlap, at present, between the two institutions. Much more substantial savings would be generated if the new, enlarged comprehensive universities could expand to exploit economies of scale. The case for such an expansion rests, ultimately, with the country's need for more highly qualified manpower, but, in addition, the expansion of the comprehensive university would result in cost savings, arising from the fall in unit costs. It is not possible to estimate the social returns to expanding the supply of graduates using conventional rate of return techniques because of the peculiarities of the Chinese labor market, and the absence of earnings differentials for most graduates. However, the cost savings gene- rated by the expansion can be compared with the additional capital costs to estimate the net addition to the true social rate of return that would arise from the falling unit costs due to the merger and expansion. Further details of these estimates are shown in Annex 6.2. If the capital costs are amortized over 25 years, the net addition to the social internal rate of return result- ing from the consolidation and creation of a single comprehensive university, - 135 - with a capacity of 5,000 students, would be about 3.5S. If a similar saving in staff costs could be achieved with only half this capital expenditure, the addition to the rate of return would rise to nearly 1OZ. These estimates are very crude, and based on only very rough approximations but they illustrate that substantial economies of scale could be achieved if the provincial government agreed to merge the two Institutions and expand them in order to benefit from economLes of scale. 6.65 An additional benefit would be the Increased flexibility of a comprehensive university, compared to the Baojl Teachers College which specializes In teacher training at a time when demand for new secondary school teachers is declining In the province. (Due to the fall In the birth rate). 6.66 Very rough estimates have been made of the potentlal benefits of consolidation in other institutions in the province. In Guizhou, the Institute of Technology has prepared plans to expand student numbers and rationalize some of the existing courses which involve small classes and low utilization of laboratories and equipment. If an expansion of student nmnbers from 3,359 to 5,000 could be achieved, the Institute estimates that the student-teacher ratio could be increased from 4.5sl to 7s1, with a correspond- ing fall in unit costs. This would still be quite a low ratio by international standards, and in the long run the target should be in the region of 10, or even, 12:l. 6.67 The improvements in efficiency outlined above would all require additional investment in physical resources, improvements in libraries and in management information systems in order to achieve the economies of scale that offer such significant potential savings. If internal and external efficiency are really to be improved, it will be important to ensure that universities and colleges do not simply hire additional staff to cope with the expansion of student numbers, or install expensive equipment which is underutilized. The following section examines the feasibility of increasing efficiency by lower- ing unit costs and student-staff ratios, in the light of political, practical and financial obstacles. FEASIBILITY OF INCRASING INTERNAL AND EXTERNAL EFFICIENCY OF NIGHER EDUCATION 6.68 The two main obstacles that have prevented consolidation of higher education institutions in the past are the political problems associated with securing agreement among the various bureaus, ministries, provincial and prefectural authorities, and the practical and human problems of reducing staff numbers. 6.69 In Guizhou, for example, the Institute of Technology comes under the Sigher Education bureau of the Provincial Education Commission, while the College of Civil Engineering comes under the Provincial Department of Urban Construction. There are many other examples of duplication of facilities due to a division of responsibilities between different provincial bureaus. In the past, the difficulty of persuading two or more colleges to agree to combine forces have prevented such mergers, but the provincial governments are - 136 - now considering such proposals more seriously. It is necessary for the pro- vincial government to take a strong lead to overcome resistance to consoli-da- tion and mergers, In cases where this would increase efficiency and cost- effectiveness. 6.70 It is not only the administrative, practical and political problems of mergers that present obstacles. A major factor in China is the fact that the work unit represents not only the physical eavironment for staff and workers, but the whole complex social structure within which they and their families live, their children go to school, they receive medical care and other services. Thus, in China to merge two institutions means an even greater social upheaval for the staff involved than is the case in most countries. 6.71 Moreover, the savings in staff costs will be realized only if reduc- tions in staff numbers can be made. In the case of the proposed merger between Baoji Teachers College and Baoji University the initial reduction in unit costs would be achieved by cutting total staff numbers from 765 to 545, a reduction of 180, or nearly 252. There are many examples of staff reductions of this magnitude in institutions of h gher education in developed countries, as a result of financial stringency or declining enrollments. In such cases, however, the painful process of cuttin, staff numbers can be ameliorated by recourse to early retirement or voluntary redundancy packages, offering financial inducements to staff to leave. Without such programs it may be difficult to implement cuts In staffing. In China, education institutions have to some extent absorbed surplus labor that was forced to seek alternative employment as a result of staff reductions in industrial enterprises. This makes it even more difficult to impose the staff cuts that may be necessary if two colleges or universities merge. 6.72 Nevertheless, there is evidence that these problems have been over- come in some cases. Successful examples of institutional mergers in other provinces should be carefully studied, with detailed analysis of both the obstacles and the savings that resulted from the mergers. Only by careful assessment of both the costs and the potential benefits of consolidation and rationalization will it be possible to demonstrate the improvements in internal efficiency that could be achieved. 6.73 The provincial governments may need to act to overcome internal resistante to mergers or consolidation. In some cases it may be possible to provide f,ancial incentives to institutions to consolidate. For example, capital expenditure may be required to enable two small institutions to combine on a single campus, and the provincial government could provide capital funds only on condition that a merger takes place and staff numbers are reduced. If institutions plan to expand student numbers it could be a requirement that student-teacher ratios be reduced. However, current SEdC policies on student enrollment have, in effect, imposed a freeze on student numbers, which prevents economies of scale being achieved. On the other hand, the SEdC is acutely aware of the problem of the low efficiency and low quality of many small universities and colleges, and wishes to concentrate expansion selectively, in order to overcome these problems. - 137 - 6.74 The mission strongly reinforces the recomuendations of the previous World Bank study, thats (a) universities should seek to raise substantially the student-teacher ratio from the current level of 4:1 to at least 8sl, vith 12:1 as the ultimate target; (b) universities should be encouraged to expand enrollments to at least twice the current aversge sisel tc) measures to increase the level of utilization of facilities should be encouraged and increased, in order to achieve more efficient use of classrooms, libraries, laboratories and equipment. 6.75 More specifically, in Guizhou and Shaanxi province, the mission recameends that: (a) the provincial authorities take active steps to increase the inter- nal efficiency of universities and colleges through a policy of rationalization and consolidation of departments and Institutions. (b) provincial and university authorities explore the feasibility of merging small institutions in order to reduce unit costs and lmprove the utilization of esisting facilities. (c) universities reduce the degree of specialization of courses in order to increase the flexibility of graduates and make more effective use of staff and physical facilities. ClAP'Et V: SINWMR OF 00D1 ISIJES N REl ODAt ~~~~~~~~~~~~~~~~~WT - - ISUE EMIGOC KCtM TI TVAIN DIRECTY INVULY REFEICI RUGUw* ALLOCATIM 1. Overall tl 1owsrnment (a) Chlna allocates log (a) Inoee_o ton (a) Long tofu ISOW. Pron1cial and rln=!"W"for to primary dedction greats from central Pilot progrm to be Municipal - Conty education o than other countries ad g trsted nn between lIM- Bureau adeuate, but u_e finan dentral - Very Po ars to 195. present financa tion I r lts In os y for ta arrangensets there resorce for poor die- o r r rrent cost. ' arm too am trict. Prlority to be gives SIoC teace in urban to prmary education. Ma vocational All ddtioal fundi cwhools while poor to he allocated to Ch. IV cosmunitlie can rural prlmry schools afford to provide to achloe universl basic edcation. coVora9r. (b) There to a wide (b) overnment (b) PIlot progem to 1luniespsl, o variatton on per pupil tran ers froe central strtn lSM. County expenditure among urbn to local :reas, end Bureaus and rural rasc, and It more eftlc ent io very low In poor distribution of are*. teachers. (o) Wln San te ce re (e) Incrse WIN BAN (c) Long tore losue (MOW-S=) Ch. II%, ( of teachrs) lack salaries to at lest to be assed IV Job escurity and heir cower *ubslstonce gradu lly betwen earnings are blow sub- loee and create pen- 102 end 2000. sIst nc r quirento. *lon fund. (d) Dilopidabtd and dan- (d) Ineros In Ch. IV erou building. central ovrnment tronsfern for danger- on buildings. UNITS CHAPTER ISsues EVIDENCE RECOMMEIDAnONS TIlING DIRECTLY IWMLVED Ro EFFCIENCY IN Roma UTIUZ IO 2. Resoures llot (a) Low etudut./teechor (a) Freeze on cration * Immediate Provincial Ed for primry VW ratios due to ecessive, and expansion of SureavuCb. IV seondry schools n_mber of tOehoro In tachoer training nor- could be utilized urwbn areas. no school. and tran- more effe*ctvely. In oft Teaher i two subject areas. (b) Very specialized (b) Limits on size ot a lwmdiato SEDC and provinciol Cb. 11I, tV teacher n secon ry enol lwno i, n coil"gs bureu schools with or level tocer training 1I". _1@"l. (c) Increa_ on staff (c) Limits on birlng a Immediate. Roacb Provincial Ed Buraus Ch. IV leries growing faster oet na tonehers In student/teacher ratio than otbhr expenditures. urban arear. of 1 to 20 by 1296. (dl Exprn tve-underl (d) Evaluation and a 1998 - 108 In SEDC - People's press Ch. V ut,i d equipmet for redetson of science pilot basis. Scenel coures at curriculum, and sol- secondary l'el.* enc euipet requl irsets. (e) Too mny t*echer In (e) Grdually lacros Imedite SEDC - Provincial Ch. IV, V the citi e nd too few workload o gov rnm n Educttion Buraus In rural area. ftnac city teacher County 8ure us and freeze apoi t- its utilI studw teScher raos are -_ (t) Little money for (f) A policy requing AI Iloations to Prowincial Govenmt Cb. IV eSntoil larning Inerea *allocation represet 1" of an County Education ctvitien and funiture for nan-salary recurret budget by Bureus In rurel prlmry "epess. 1996. schools. ) Swil tlloe tono td Polic routrin llocations to Provincial Qovermeat tor mai_nte*sm. olnlo * lo tio Ssrepee t o and County idon for building buge by 199S. Bura mintenae. UNITS CHAPTER tlIES EVIECE REC0ONUDATtONS TTIID DTRECTLY INVOLVED REFENC S. Costly snd (a) Costs of vocational (a) Still training to Pilot Progm with *MOL SEDC Ch. TIti Ineffeative school growing flot and be carried-out by MOL to staut In 1992. vocltonal achols. grduates not bettr labor bura who have preared for labor better understwtdimg mrket. of the world work. (b) tnternational (b) Gradual reduction 1992 - 199 SEDC - Provincial Wvd-nce show that In ratio of vocational Education Bureaus return to vocational to genral secondwry education *are gwnorlly. echool. lower than returns to gner al oducation( (t the etudy of Labor 1992-1996 SEDC - MML and secondery level) and mret and carer Provincial Education that employers preer patterns of Oraduates a*d Labor Bureaus more broadly trined as basis for deciding "tff. kinds of Okills to be provtded. 4. Averag hlgbar (a) Unit cost higher (a) Reoroane *PI lot program SŁDC - Othr Central Ch. Vt ° education than In otber Asian unlvernittes to Bureaus Institutiona are countries. achtio v eonoie s of Protvincil Education oetbly and scale and lose Bureaus Univeraities lnffi clent. (t) Very low rigidity in lnvolved etudew/tleaha.r rtios. curriculum. (B) Provincial uni veritie are undertin nced In rotation to nationally funded universities and unable te meet noeds of a growng econy. ESTY ANS & M I L SCHWOS 6. Budetry allocations f"or urban areas nd quality of rural schools eroding due to: (a) High costo of (a) Costs reprsont high (a) Free distributtA e Pilot program Provincial Institute Ch. tV books to parents. proportlon of rurol of books In poor of Reoseach income. distritct. umITs CiAPTER ISSUES EVIDENCE RECOMMENDATIONS TIMING DIRECTLEY IWOLVED R rE (b) Lack of bi- (b) Bilingal schools (b) Support to bilin- * Pilot pr"oram Provincial Institute ChIII llngwl, btculeturl hnave lo drop-out than gual ucatlon. Of Rearch program in one lungue schoolu In minority *reas. billngul areas (c) Rgoiditles In (e) Experienced, welf (c) Recruit, assign lnediste Municipal, Districet Ch. IV training of motivtetd mlonbn rural teacher to Bureaus teachers. teecere with rural schoolo and e*rtificat4e ree improv salary leve general secornary and prmotlon schools treated as possib I ties. unqualified and pald low salaries. (d) Poor living and (4) Tmprov housing of P lIet progrm teahing conditions rural teachers. In rural choole. (e) Lack af support (4) Teachers In one room (.) Speciel support Pilot prorm for one-rom school are Isolated and prorms for on hools. reive little traIning. teher - on room scbools.