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Chapter BEducational policy, the administration and financing of education
Chapter B
Educational policy, the administration and financing of education
1. The trends and values formulated in educational policy in 1996-97
Hungarian school education at the beginning of the 1990s could be described as having two main features: crisis and adaptation. Nowadays we have to add a third one: stabilisation. The crisis and the ensuing need to adapt were brought about by the dramatic transformation in external conditions, such as economic recession, the deficit in public finance, and the consequent austerity measures. The harshest effects of the economic crisis hit the public institutions, and among them especially the schools, at a later date. One of the major causes of this timelag lies in the decentralisation of educational administration (see in more detail below), since up to 1995 the local communities were able to compensate for the decrease in central support and provide a kind of safety net for the institutions. After that year, however, they were no longer able to do so.
The crisis in school education provoked by the fiscal restrictions were amplified by the parallel change in another important external condition, in demography. Though the demographic decline reached its lowest point by the middle of this decade the decline has continued - if not to that extent and not that fast - and will probably continue in the future as well.
School education went through its most difficult years from the point of view of fiscal restrictions in 1995 and 1996. This was a period of school closures, discontinuation of former services, dismissals of teachers, and of local conflicts revolving around these events. It was in 1995 that the formerly unbroken trend in which public education received a growing share of the gross domestic product was halted and, for the first time, the growth rate of the support for education sank below the officially published rate of inflation. In 1995 and 1996 the real value of teacher salaries decreased to an unprecedented extent. These were the years of teachers leaving the profession, entering re-training programmes to turn them into insurance agents or tax officials, or, last but not least, - becoming entrepreneurs. But one of the major worries of Hungarian school education, namely that too many teachers, and not well-paid teachers, work in schools, was not solved in this period either.
It is worth mentioning here that the cutbacks and the ensuing social tensions were stronger in higher education than in public education. It was in higher education that one of the most opposed measures, the levying of fees, was carried through and it was in this sector that the reduction of staff met with the strongest opposition on the part of employees.1 There was a significant difference in cutback policies between higher education and school education, and in the responses to these policies by society. While in higher education the government was both the agent of the restrictive policies and the target of the opposition in public education the tensions - due to the decentralisation of school ownership - mostly appeared at the local level.
The transformation of the economic environment has had a peculiar impact on vocational education. The state-owned large industrial plants used to provide the background for the vocational education of skilled workers, which enrolled a vast majority of the 14-year-olds. These plants have disappeared for good from the Hungarian economy. Their place has been taken over partly by companies with foreign capital interests and partly by small and middle-size enterprises, which are able, or willing, to employ vocational students in much smaller numbers. Furthermore, the proportion of economic sectors and employment areas that require white collar workers and a better qualified work force has increased.
By 1996 a bigger role was being played by the private sector of the economy with regard to producing the gross national product. Even though many of the subsidiaries of multinational companies, especially in the export-oriented sector, often seek a less qualified workforce the privatised economy in general has become more demanding. Better qualifications mean greater chances in this sphere. This, however, does not usually result from a higher esteem for traditional forms of schooling but rather the appreciation of those competencies and attitudes that are required for successful adaptation to the demands of the workplace. These competencies include reliability, good rapport with colleagues, knowledge of foreign languages, skills for independent learning, willingness to move to a new profession, and skills in handling the modern tools of information and telecommunication technologies.
As far as the political context is concerned we can say that by the mid-1990s the institutions of democracy were formed and had stabilised. However, signs of stabilisation were closely tied up with signs of crisis and adaptation. This statement is particularly valid for the relations of administration and financing since the system of local governmental administration and of local financing started to stabilise exactly in this period of crisis and adaptation. The concrete contents and the varied practice in exercising local governmental responsibility were clarified and developed in most areas of the country in this period of rationalisation. The ability of decentralised authority to crisis manage and adapt was clearly demonstrated here.
The transition taking place in Hungarian school education is usually perceived as a reform process by foreign analyst even though the word reform is not heard within the country. In Hungary, alienation from the concept of reform can be explained by the legacy of the state socialist system, which regularly launched new reforms but was not able to - and did not even aspire to - win the approval of the general or the professional public. The current processes, however, are different in character. The decentralisation of administrative power excludes the possibility that the governmental centre initiate overall reform for all elements of the system. A reform today can only mean the co-ordinated support and the strengthening of the local initiatives, of the local and institutional level, and of innovations at various points in the system. Stabilisation thus does not mean the disruption of changes. On the contrary, it means the stabilisation of the reform process.
Legislation and education policy debates
In accordance with the 1993 Public Education Act in 1995 the government adopted the most important document of content regulation in force today, the National Core Curriculum (see in more detail in Chapter D on curricula, examinations and pupil attainments)2. Right after this the Parliament passed those amendments to the Public Education Act which were seen by the socialist-liberal government as the most urgent3. The changes contained the most important measures that were needed for the introduction of the National Core Curriculum and some restrictions to slow down the vertical changes of the school structure. Furthermore, they abolished the Regional Educational Centres (the organs of regional professional administration).
The overall amendment of the 1993 Public Education Act was carried out in 19964. The number of the amendments was so high that a lot of people thought a new act had been adopted. Yet the Amendment can only be considered a further development of the 1993 Act. The new elements included in the Public Education Act (new norms for the provision of tasks at the local level, more detailed regulations of the assessment and examination systems, the responsibility of regional planning being allocated to the county level, and the widening of student rights) easily fit into the former structure of the Act.
During the preparation of the new legislation there were a number of debates going on in the narrower professional circles and in the wider political context, which indicated that there were significant differences in opinion in society and in the teaching profession concerning the transformation of the public education system and its future development. These differences in opinion mostly appeared over the reform of content regulation. The debate was most heated about the reform of the school leaving examination, where one of the underlying issues was the future of the traditional general secondary school, the gymnasium (see in more detail in Chapter D on curricula, examinations and pupil attainments). There was huge controversy over the intention of the Ministry of Culture and Education to make the choice of the subject of history optional at the school leaving examination. This was fiercely criticised by a section of the general public, leading to the declaration by the Minister of Education that the compulsory examination in history could not be abolished. The plan to introduce the dual-level school leaving examination was the other main target of criticism. There was no compromise reached on this issue. The 1996 Amendment to the Public Education ruled that the students could decide in which of their subjects they wanted to be examined in at the general level, and which at the advanced level. The Regulations of the School Leaving Examinations, which were adopted by the government in 19975 and will be introduced gradually until 2004, make it the students right to choose the level of examination subject by subject.
The other debate concerned the intended rise in the compulsory number of lessons to be taught by teachers. Among other things with which the government tried to force the school maintainers and the schools to revise the number of teaching positions, and reduce it where justified, was the intention to raise the number of compulsory lessons, which were low by international comparison. The publicity given to this intention mobilised the teachers trade unions but the school maintainers (mostly the local governments) insisted that the rise should take place. The number of compulsory lessons was actually raised by the Amendment of the Public Education Act but the measure affected only certain groups of teachers and its extent was much smaller than formerly planned.
There was much less controversy about the other item of the Amendment that directly concerned teachers: the regulations about in-service training and the specialised examinations being made compulsory, though these were among the most significant changes initiated by the amendment. They are significant not only because they directly influence the conditions of teaching but also because they have serious implications for the re-distribution of the resources meant for public education. They also introduce a new element of modernisation into educational policy. There was also little debate over another outstanding measure of the Amendment, which extended compulsory schooling. The reason for the relative lack of interest can be found in the ruling that it only affects those who enter primary school in 1998, i.e. the effects of this measure will only be felt a decade hence. By raising compulsory schooling from the age of 16 to 18 Hungary has joined those few European countries where compulsory schooling lasts more than 10 years.6
There were more debates about another point of the Amendment of the Public Education Act, the widening of the circle of students rights. These measures, on the one hand, meant the incorporation of some formerly adopted international agreements into Hungarian legislation, and, on the other hand, they laid down some completely new individual and collective student rights, especially the widening of the rights of students' self-governing bodies. So, for example, the students - through their delegates in the school board - can now exercise their right to form an opinion about the general questions of the school's pedagogical programme. This liberal approach to student rights raised some opposition from those who are concerned about the maintenance of school discipline and about the undermining of traditional authority.
The liberal inclination of the ministry proposing the Amendment is reflected even more strongly in another item of the regulations, in the handling of the freedom of schooling and private education. As opposed to the former regulations according to which private maintainers could only receive state support if they made an agreement with the local government or with the state, the new regulations grant normative state support for all private institutions which are registered and operate lawfully.
Budgetary debates
The budget of 1996 can be considered to be of outstanding significance as it contained a number of public educational issues of strategic importance. For example, it was the 1996 Budgetary Act7 that decided that there would be no direct financing of salaries by the state, as was a likely prospect under the 1993 Public Education Act. This ruling implied that one of the biggest issues of educational policy in the 1990s, the reduction of the school capacities and the teaching staff made superfluous by the decline in pupil numbers, was not going to be solved by the central government directly, or by the centralisation of the right to decide on the allocation of resources: the central government left the task of coming up with local solutions in this respect to the local governments. In principle, the questions could have been raised as to whether there really was superfluous capacity and whether teachers should be dispensed with. But the answers to these questions were given earlier and outside the sphere of public education. Through the budgets adopted at the end of 1993 and 1994, including freezing the normative grants to public education, the message was sent" to the local governments that the central policy did not wish to finance surplus capacity. The efficiency indicators of Hungarian public education, especially the relative salary expenditure per pupil, became so favourable by international comparison by the beginning of the 1990s due to the decline in pupil numbers that it prevented the viability of any educational policy that would have aimed at the preservation of the surplus capacity. With the adoption of the budget of 1996, however, the educational policy makers expressed their intention to channel a part of the resources - formerly used for the financing of the superfluous capacity - into the financing of development.
It was the 1996 Budgetary Act that first contained a support system that matched the National Core Curriculum. In this Act normative financing was made to serve the realisation of the government-level strategic objectives much better. The approach was that influencing the local adaptation processes could be best achieved by making the maintainers financially interested, and the number of supplementary normatives that served the strategic objectives was consequently raised. Rather than being earmarked the central grants meant for salary rises were built into the normatives, motivating the maintainers to replace the characteristic and automatic base-financing with active financial management of personnel. The local governments were compelled to create the resources themselves for the pay-rises by reducing personnel but were allowed to take loans - with central budgetary security - to cover the temporary expenditure increases (e.g. severance payments for those dismissed).
In 1997, following the amendment of the legislation of the year before, the government released substantial resources for the support of development in the field of educational contents. Most of these resources were allocated to the schools, where they could be used for personnel expenditure on content development and in-service training. The Amendment connected certain elements of in-service training with pay-rises. The overall settlement of teacher salaries has however remained the biggest unsolved problem of the period.
The 1996 Amendment of the Public Education marked a new definition of the responsibility of the state for public education: the state can guarantee and influence educational provision first of all by determining the general rules of local educational provision as exactly as possible and by motivating the local decision makers.
One of the key slogans of the central educational administration operating between 1994 and 1998 was modernisation but, independently of the individual administrative sectors, modernisation as a political objective characterised the whole of the socialist-liberal government coalition. The educational policy marked by the adoption of the National Core Curriculum represented modernisation in the contents of education, namely the broad-term reform of content regulation, the development of the system of assessment and the system of quality assurance, and the support of professional competencies, and of the professionalisation of teachers. Addresses given by the Minister of Education on various occasions in 1996 and 1997 emphasised the importance of the expansion of secondary education and of the contents reform, and formulated two modernisation objectives. One of them was the development of education in information technologies and the connecting of schools to the global telecommunication networks, and the other was the development of an in-service training system that would ensure constant development of the professional competencies of teachers and in so doing would realise the objective of life-long learning within the teaching profession. These modernisation objectives were approved by the 1996 Amendment of the Public Education Act.
2. Decentralised maintainer administration and county level planning
General characteristics of the administration of public education. There are two major features that are characteristic of the administration of public education in Hungary: one is its integration with public administration, the other is the system of shared responsibilities. Integration means that public educational administration is not separated from the general system of public administration, or local governmental administration, at the local and regional levels. There are no local or regional administrative organs directly subordinated to the central government. The responsibilities for the tasks of public educational administration at the local and the regional levels lie with the elected bodies of the local governments and with the notaries, who are in charge of general public administration. Within the local governmental offices there are usually no separate organisational units responsible for the administration of public education. Integration is expressed by the system of financing public education as well: it is part of the general financing system of local public services.
The administration of public education can be characterised by shared responsibilities both horizontally and vertically. Horizontally, the responsibility for public education is shared between several governmental organs. Vertically, responsibility is shared between the central governmental organs, the regional governments, the local (settlement) governments and the institutions of public education. These levels all possess independent administrative rights which limit the rights of the others but which presuppose their active co-operation.
Administrative levels and functions. When analysing the administrative system of public education we can differentiate between the levels of administration and the administrative functions. There are fours levels of public educational administration in Hungary: (a) the central or governmental level, (b) the regional or county level, (c) the local or settlement level, and (d) the institutional level. Such a four-level administration system characterises many of the education systems of the developed countries. It is a special feature of the education system in Hungary that there are significant decision-making competencies allocated to the local and institutional levels while the regional level has the smallest influence. In the allocation of the decision-making powers there is hardly any difference between the different (primary and secondary) levels of education.
Concerning the administrative functions there are three major groups: (a) political, interest-negotiation or consultative functions, (b) governmental, administrative or authority functions, and (c) professional functions. These functions lead to agents (organisations, institutions, bodies) with different administrative functions. Table 1 shows the agents of the administration system of Hungarian public education.
The administration system of Hungarian school education
| Political, interest-negotiation and consultative functions | Governmental, administrative and control functions | Professional functions | ||||||||||||||||||
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| National level | Parliament; The Parliamentary Committee of Education, Science, Youth and Sport; National Public Educational Council; Educational Policy Council | Ministry of Culture and Education (Ministry of Education since summer 1998) other sectoral ministries | national professional services, research and development institutes (OKI, OI, OKSZI, NSZI)* | |||||||||||||||||
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| Regional level | County governments and their educational committees, county organs of regional development and educational planning | head notary, the educational departments of the county governments | public educational institutions of regional functions, maintained by the counties, county pedagogical and service institutes | |||||||||||||||||
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| Local level | local governments and their educational committees | notary the mayor's office at the settlement | pedagogical service institutions of the settlement | |||||||||||||||||
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| Institutional level | school board | school head | teaching staff | |||||||||||||||||
Note: In reality the functions cannot always be separated clearly. (E.g. At the institutional level the school head also fulfils professional functions, or, the teaching staff have some functions of interest-negotiation and administration as well.)
* OKI: Országos Közoktatási Intézet (National Institute of Public Education)
OI: Oktatáskutató Intézet (Institute of Educational Research)
OKSZI: Országos Közoktatási Szolgáltató Iroda (National Institute of Public Educational Services)
NSZI: Nemzeti Szakképzési Intézet (National Institute of Vocational Education)
A direct dependency relation between the various levels and actors is very rare in the administration system of Hungarian public education. A characteristic feature of this system is that there are autonomies which complement and restrict one another. There are no relations of subordination or supremacy whatsoever among the various organs with political interest or negotiation and consultative functions. Among the agents with governmental, administrative or authority functions it is only between the local (regional) level and the institutions maintained by it that we can talk of a direct subordination or supremacy. There is such a relationship between a local governmental school and its maintainer but it is a limited one because of the legal regulations that guarantee the autonomy of the institutions. There are no administrative organs operating at the local and regional levels that are directly subordinated to the central governmental organs. As a result of this, on the one hand, interest-negotiation and partnerships become more appreciated, and on the other hand, court rulings play an increasing role. The rulings passed by the Constitutional Court are of outstanding importance as they exercise an increasing influence on public policies, and within these, on public educational policies. In the past few years the Constitutional Court has dealt with educational matters on 14 occasions, out of which 7 affected public education directly.
Responsibility for provision, institution maintenance. Providing public education in Hungary is the task of the local communities, that is, of their organs of power, the local governments. One of the salient features of our system of public educational administration is that the responsibility for educational provision does not mean the obligation to maintain an educational institution. The local governments can freely decide in what way they ensure the provision of public educational services: they can maintain their own institution or can make an agreement with another maintainer.
Another feature of public educational administration is that the allocation of the obligation for educational provision to certain administrative levels is not exclusive or does not lead to one levels monopoly. While, for example, providing secondary education is the task of the counties, towns or villages also have the right to maintain a secondary school. Up till recently the local governments in their decisions on whether to maintain an educational institution were only influenced by economic considerations, i.e. if a local government considered the foundation of a school financially feasible there was nothing to prevent it from doing so. Since 1997, however, the local governments have to take into account the county developmental plans (in more detail later).
The vast majority of public educational institutions in Hungary are the property of the local or the county governments. The decisive role that the local governments play in the administration of public education is not only the consequence of the important administrative rights allocated to them but also of their role as the owners of educational institutions. In the past few years the number of local governments among the school maintainers has somewhat decreased to the advantage of the county governments, and the number of private and church school maintainers has also risen (see Table 2)
Changes in the number of schools maintained by the various maintainers, 1993/94-1996/97
| general school | secondary school | together | ||||||||||||||||||
| Maintainer | 1993/94 | 1996/97 | 1993/94 | 1996/97 | 1993/94 | 1996/97 | ||||||||||||||
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| Local government | 3574 | 3470 | 605 | 591 | 4179 | 4061 | ||||||||||||||
| County government | 49 | 60 | 172 | 216 | 221 | 276 | ||||||||||||||
| Central budgetary organ | 30 | 30 | 24 | 38 | 54 | 68 | ||||||||||||||
| Denomination | 94 | 145 | 42 | 63 | 136 | 208 | ||||||||||||||
| Foundation, private individual | 21 | 56 | 19 | 65 | 40 | 121 | ||||||||||||||
| Other | 3 | 4 | 5 | 7 | 8 | 11 | ||||||||||||||
| Total | 3771 | 3765 | 866 | 980 | 4637 | 4745 | ||||||||||||||
Source: Ministry of Education, educational statistics.
Central administration
The responsibility for public education within central government is exercised by the Minister of Education (Minister of Culture and Education until summer 1998). The Minister used to supervise the area of culture besides public and higher education. In the new governmental structure the area of culture is administered by the Ministry of National Cultural Heritage.
The direct supervision of school education is carried out by a deputy secretary of state. The size of the personnel responsible for public educational matters is fairly small in international comparison, which is due to the broad responsibilities allocated to the local and regional levels. The increase in the tasks of the Minister brought about by the changes in the legislation has not resulted in the growth of the ministerial personnel so their number is very small, as are their responsibilities. The successful administration of the field of public education presupposes that the responsible deputy secretary co-operate with the deputy secretaries responsible for higher education, for international relations and for finance. Within the Ministry the political secretary, who is responsible for the representation of the Ministry in the Parliament, also deals with public education as one of his general tasks and on some special occasions of interest, as does the administrative secretary of the Ministry, who is responsible for the internal organisational matters of the Ministry and for the inter-ministerial relations.
The Public Education Act determines three main types of the Ministers responsibilities for public education: (a) direct administrative tasks, (b) regulatory tasks, and (c) developmental tasks. The 1996 Amendment of the Act broadened the responsibilities of the Minister of Education and assigned new tasks to him/her. There are new tasks, for example, concerning the in-service training of teachers and institutional heads, the preparation of the county developmental plans, the organisation of the students parliament, and the measurements and assessment tasks of public education.
It is an important feature of the central administration of public education that there are relatively few direct administrative tasks attached to the ministerial level but, at the same time, the number of regulatory and developmental tasks is very high. The extent of decentralisation in the Hungarian public education system is shown by the fact that the central administration can little interfere with the local and institutional level processes directly. With the exception of the organisation of the examinations and on the occasion of an extraordinary event the Minister can exercise his/her responsibility only via indirect means and only with regard to the education system as a whole and not with the individual institutions. The way the legislation regulates the Ministers responsibilities practically enforces the Minister to fulfil the role of a strategic developer. The major indirect means the Minister can resort to are the motivation of developmental initiatives and the adoption of the general regulations that determine the operation of the institutions.
In the former administrative structure co-operation between the Ministry of Culture and Education and the Ministry of Labour was of outstanding importance since it was the latter that bore the responsibility for vocational education. Their co-operation can be exemplified by the new regulation of the school leaving examinations in 1997: while the formulation of the examination requirements and their submission to the central government was the responsibility of the education portfolio, the requirements for the vocational examination subjects were prepared under the supervision of the Ministry of Labour. A similar example is the operation of the committee which in 1996 - under the shared supervision of the two ministries - published the long-term labour market prognoses that, among other factors, have oriented public educational planning at the county level. The 1997 institutionalisation of the so-called short-cycle higher vocational education also happened with the co-operation of the two ministries. In the new administrative structure the responsibility for vocational education has been assigned to the Ministry of Education (while the Ministry of Labour has been abolished and its tasks re-allocated).
It is a special Hungarian feature that the Ministry of Education and the Ministry of the Interior carry out intensive co-operation in the field of public education. Since the administration of public education is integrated into the system of local governmental public administration, and since the state support for education is built into the general financing system of public administration, the Ministry of the Interior responsible for the local governmental system and for public administration inevitably plays an important role in the indirect administration of public education. The co-operation between the Ministry of Finance and the Ministry of Education is also of growing importance in the administration of public education.
The necessity for the various fields and ministries to co-operate explains why there are more and more occasions when it is not the ministry but the central government that makes a decision on an educational matter. Such matters have been the adoption of the National Core Curriculum and of the requirements of the school leaving examination, also the adoption of the higher educational training requirements (such as school management training) which have implications for public education as well, and the regulation of the whole system of in-service training.
Local and regional administration
Most decisions concerning public education in Hungary are made by the local governments. One of the decisive features of the Hungarian system of public educational administration is the large number of local authorities that maintain schools and - what goes with it - the smallness of the average size of these authorities. There were 3168 local governments operating in Hungary in 1997. 2400 of them maintained a public educational institution, out of which 1818 maintained a general school with at least eight grades. 74% of all local governments maintaining a school, and 55% of the local governments that maintained an at least 8-grade general school, operated in villages with fewer than 2000 inhabitants.
Irrespective of their size all 2400 local governments enjoy the same broad local administrative rights, which are laid down in the Public Education Act. This large number is unique in Europe. In comparison with some other decentralised systems which are built on the local governmental ownership of schools: the number of local governments with the right to maintain a school is 286 in Sweden, 439 in Norway, 440 in Finland, and 277 in Denmark. In the United Kingdom, which has a decentralised system as well, the county and the city district local governments are the local education authorities, and their number is 116 (Structures of the Education..., 1995). The local administration of public education in Hungary is very fragmented: the average size of the administrative authorities is small while their number is very high.
Due to the large numbers and to the small sizes the professional competencies needed for the fulfilment of the tasks of local public educational administration are hard to develop, or cannot be developed, by the majority of the local governments. In most cases the notary, who controls legality and fulfils administrative tasks, is the only official with a higher educational qualification. An independent organisational unit to deal with the matters of public education does not always operate even within the local governments of towns. A vast majority of the decisions are passed directly by the elected bodies of representatives. These characteristics of administration are in accordance with the demands of a local democracy but they inevitably contribute to the growing inequalities between the areas. (See also Chapter F on the strengths and weaknesses of the system.)
Due to this situation, understandably, there is a growing attention paid to the co-operation between the local governments, to the associations. The central policy has tried to stimulate the associations by various means in the past period. In 1996 the regions that were willing to enter into associations received central support for school buses. There were grants earmarked in the same year for those founding an association to maintain a common school. The regions that entered into associations to ensure public educational provision were given normative support as well from the central budget. Besides this, the towns or villages that received pupils in their kindergartens or general schools from other settlements could apply for some additional support. The inconsistencies of these policies are revealed, however, by the fact that every village that maintained a school received a sizeable normative grant whether the conditions for association were present or not. This measure encouraged the settlements that would have otherwise been willing to enter into an association to organise their educational provision themselves. The willingness to associate is rather weak among the Hungarian settlements, which is clearly reflected even by the scarce data available. According to a survey in 1994 (Közoktatási intézményhálózat, 1995) out of 8056 institutions only 1028 fulfilled small-regional tasks, and only 373 of these (4%) within the framework of an association. Still, the associations in most cases only solve the basic difficulties with task provision and do not necessarily bring about significant changes in the professionalism and contents of local administration.
Among the conditions of decentralised administration local decisionmaking has an important influence on the efficiency of the public education system since the use of the resources at disposal basically depends on the local decisions. The years of 1995 and 1996 meant an extremely big challenge for the local administration of public education because, due to the demographic decline, the size of the central state support granted to the local governments for educational purposes decreased considerably. The local governments were consequently forced to x-ray their public educational institutions and to deconstruct the superfluous or non-financeable capacities. This rationalisation at the middle of the 1990 was a painful process: it was at this time that the local governments took real possession of the public educational infrastructure which had been formally theirs since 1990 and started to behave as owners. The school maintainers only acquired a better knowledge of their network of institutions during this period of x-raying. Furthermore, the opposition of the local inhabitants that grew in many areas as a reaction to school closures and mergers did test the local communities.
The 1996 Amendment of the Public Education Act and the introduction of the National Core Curriculum have assigned new tasks for the school maintainers (mostly the local governments). They have to set up the financial framework within which the schools maintained and administered by them can develop their own pedagogical programmes and local curricula. Through the decisions made during these negotiations between the schools and the maintainers the maintainers can, in theory, set up new professional guidelines for the institutions, can re-structure their institutional system, and can re-define the scope of education provided at the settlement. These decisions determine how in the long run the public educational tasks are fulfilled and how the cause of public education is advanced in individual places. Their summation determines the same for the whole of the country.
In view of the demographic characteristics and the existing institutional structure, each settlement has to draw up their mid-term plans for the local organisation of educational provision. For this forecast they have to consider indicators such as the number of pupils, the number of school groups, the number of pupils per class (average and maximum numbers), the number of lessons to be taught, and, based on this data, they have to determine the optimum number of teachers employed. If these analyses lead to proposals to close, transform or merge institutions they have to examine the possible political implications of such moves. It is impossible to envisage today how local educational administration as a whole and the various groups of school maintainers will be able to meet the challenges arising from these decisions.
The past few years has seen the role of the regional (county) level gradually increasing as well. The 1990 Act on the Local Governments assigned the county governments with rights similar to those of the local governments, so their actual regional responsibilities became very limited. The 1993 Act on Public Education allocated the rather soft rights of regional co-ordination to the county governments but it did not interpret this ruling more precisely. But with the 1996 Amendment to the Public Education Act the county governments were allocated the responsibility of the regional planning of public education. The recent increase in the role played by the county governments is also due to the financial difficulties of the local governments, which made them hand over some of their secondary schools to the county governments.
In line with the ruling of the Public Education Act the county (and Budapest district) governments have to prepare - in co-operation with the local governments on their territory - a regional plan of educational provision, institutional operation and educational development. Though abiding by these plans is not compulsory, they cannot be ignored when certain decisions are made about educational development or re-organisation at the local levels. The county level administration can support the realisation of these plans, and of the regional organisation of educational provision in general, by financial means as well via the county public foundations, which were established following the 1996 Amendment, and which receive direct support from the central budget.
Administration at the institutional level
Autonomy at the institutional level is one of salient features of Hungarian educational administration. The biggest challenges to be faced by the independent educational institutions have been the decline in the number of children, the budgetary restrictions, and the preparation of the pedagogical programme of the institution, in line with the National Core Curriculum.
In trying to adapt to the decline in pupil numbers and to the fiscal restrictions, a conflict-laden process in all respects, the decisions made at the institutional level have played important roles. The majority of the decisions concerning rationalisation were made within the institutions. As in the Hungarian system the employer of the teachers is the school head, it was the head that had to decide what pedagogical programmes to terminate and which teachers to dismiss. The new situation did not only change the relationship between the institutions and their maintainers, it also affected the internal relations within an institution and the relationship between the school head and the teaching staff. Before the Public Education Act was amended in 1996, the central guidelines did not offer much assistance to the management of the internal resources, so the internal and external bargaining processes did not take place in a regulated way. The new operational parameters determined by the Amendment (number of compulsory lessons, splitting study groups, etc.) have made the local and institutional bargaining processes somewhat more regulated, but they can still be neglected if the resources are available and local agreements are reached. The further adaptation to the new regulations (such as the rise in the compulsory lessons to be taught by teachers) will require institutional decisions that will inevitably bring about further conflicts of interest.
The elaboration of the school pedagogical programmes in line with the National Core Curriculum has meant a big challenge for the institutions, who have had to carry out internal (school level) and external negotiations (with the maintainer). It is an especially difficult task to adopt a timetable that determines the work load of the teachers and the internal division of labour. On the professional front, the institutions face the hard task of the elaboration of the pedagogical programmes and the preparation, or selection, of the local curricula and their adaptation to the specific school environment. To gain the approval of the local governments the schools have to defend the number of lessons they teach (so that they do not lose any of the former number), and they have to argue for the importance of the tasks they want to carry out beyond the compulsory ones, because the local governments undertake a long term commitment when they accept the conditions laid down in the local programmes and curricula.
The new tasks concerning the development of educational contents and the implementation of the National Core Curriculum have partly re-structured the responsibilities within the teaching staff as well. There is an observable tendency for the weight and importance of the common, staff-level decisions to grow as opposed to individual teacher decisions. Formerly, for example, it was the sole right of the individual teacher to select a textbook. Now, according to the amended legislation, the selected textbooks have to match the local curriculum adopted and the opinion of the teachers departments has to be asked for. The importance of common decisions can be expected to grow in connection with the in-service training of teachers, since the decisions about the use of the grants earmarked for inset purposes will have to be made at the institutional level.
In education systems where institutional-level decisions carry a special weight the quality of institutional level management is of outstanding importance. The past few years have brought much more development in the training of school managers than formerly and spectacular advances have been made in the field of school management training and in-service training. Yet a number of experts argue that the field is still not given the amount of attention due, given its importance. Despite the reforms taking place in public education the influx of new people into the headmasters profession is relatively slow. According to a 1997 survey of school heads8, two-thirds of the current postholders in public educational institutions were school heads already before 1993, and one-third of them took up the position between 1987 and 1993 (see Figure 1).
The year of becoming a school head
Source: Balázs, 1997.
Involving the social partners
In Hungarian public education, the consultative and interest-negotiation bodies, who aim to involve professional and social partners were established by the legislation of 1993. The number and the basic functions of these bodies have not changed in the last few years but their composition and concrete tasks have been thoroughly re-structured. Important new elements are the institutionalisation of minority interests in the local minority governments and the surfacing of the demand for interest-negotiation at the regional level.
At the central level the National Public Education Council (OKNT) serves the involvement of the partners mostly interested in the content matters of public education (curricular regulation, textbooks, teaching aids, examination system, teacher in-service training). This body comprises of the teacher trade unions, the higher educational institutions of teacher education, the Hungarian Academy of Sciences, and - since 1996 - the immediate representatives of the Minister of Education. The Public Educational Policy Council (KT) is the body, besides the Minister of Education, which prepares, comments on, or proposes the public education policy decisions. The KT deals with all the matters of public education policy except for the legal status and the payment of public employees. Every major professional, social and governmental partner in public education that is organised at the national level is represented in this body: (a) the professional organisations of teachers, (b) the teacher trade unions, (c) the parents organisations, (d) the students organisations, (e) the local governments, (f) the minority governments, (g) the non-state, non-local governmental school maintainers, (h) the sectoral ministries involved in education and other national organs.
The Interest-Reconciliation Council of Budgetary Institutions (KIÉT) meets within the most important forum of interest negotiation, the InterestNegotiation Council, and deals with the financial issues of the state sector. In this council the government, the employers, the trade unions and the economic chambers represent the sides that carry out the negotiations of their interests concerning the legal status of public employees and their salaries. In autumn 1995 a separate interest negotiation body of the education sector, the Interest-Reconciliation Council of Public Education (KÖÉT), was established where the local governments are also represented among the employers.
In vocational education the tripartite9 National Training Council (OKT) was established in 1991 and its most active period was in and before 1993, when the Act on Vocational Education was prepared. The 1996 Amendment of the Public Education Act abolished the OKT but parallelly created a new body, the National Vocational Training Council (OSZT) with five sides. The original tripartite set-up was complemented with the representatives of the school maintainers (mostly the local governments) and the economic chambers. The OSZT is a body of commentary, counselling and decision preparation.
It is important to note that interest negotiation with the social partners is carried out not only at the national level but also at the regional, local and institutional levels.
3. Financing
The basic principles of the financing system
There are three basic principles in the financing system of Hungarian public education: (a) primary and secondary education is a local public service which has to be ensured by the local (regional) governments, (b) other actors (churches, foundations, associations and private individuals) can join in the provision and financing of education without any major restrictions, (c) the state, i.e. the central budget, provides the lawfully operating maintainers with a grant that can cover a significant proportion, or in certain cases the whole, of the expenses of the provision. (Even though private resources - the donations of individuals, families and private associations10 - play an increasing role in the financing of education we are only going to deal with the public financing system in the following paragraphs.)
The financing system of public education has developed gradually and has got its current form in the past few years. The basic characteristics of this system have not changed since 1989 even though several of its important elements (such as the centrally set salary grades of teachers) came into effect later, in 1992. Two levels can be differentiated in the financing system of Hungarian education. One level is constituted by the budgetary connections between the central state budget and the institutional maintainers, the other by the budgetary connections between the maintainers and their institutions. The rules operating at these two levels are quite different from each other. While for the financial connections between the central state budget and the institutional maintainers the budgetary law prescribes a basically normative type of financing, the financial connections between the maintainers and their institutions are regulated to a much lesser extent. The latter can be characterised by the various combinations of base financing (the base is the budget of the previous year) and budgetary bargains, which are based on the assessment of the needs and the means. Some elements of normative financing can appear at the local level as well but this can only follow from the local decisions. The most important characteristics of the financing mechanism of public education in Hungary can be summarised in the following:
a) The two most important types of central support are the normative grants and the earmarked grants (target financing), of which the first is the determinant. The normative grants are automatically granted by the state budget if certain conditions are met. The local governments receive a variety of normative and earmarked grants, and the ones connected with education form just one group of the state grants.
b) The normative grants for educational purposes are given to the maintainers in proportion with the educational services provided (first of all in proportion with the number of pupils). The normative grant is given to every maintainer that maintains a school with an official service permit.
c) The school maintainers may have revenues from a variety of sources but the biggest proportion comes from the central budgetary support.
d) The local governments are given the central grants without any restriction as to their actual use. They have the right to channel, or re-group, the central grants to any sector or task.
e) The maintainers are free to establish the budget for their institutions. The only restriction is that the allocated budget has to cover the costs of the provision of the tasks that are laid down in the legislation.
f) The basic rules of task provision that make the budgetary demands of the institutions calculable are regulated by law. Besides the public education and the vocational education acts the act on the legal status and the payments of public employees is of outstanding importance since the salary expenditures are the decisive items of the institutional budgets.
g) Institutions (schools) with the right of autonomous financial management may have revenues other than the ones provided by the maintainer. If it does not hinder the school in the delivery of its basic tasks and if the maintainer gives its approval the schools may even enter into profit-oriented activities.
Resources and outlays
The outlays of the central budget for educational purposes, and among them the normative grants given to the local governments, are not necessarily spent on education at the local level. Thus, in the field of education, the central budget mainly expresses the intentions of the central government rather than finances the actual fulfilment of the task. On the other hand, the local level may spend more, or may spend less, than the central grants on educational purposes. This is why in the Hungarian system of public financing we can gain a picture of the total educational expenditures if we examine the expenses of the central budget and the expenses of the local governments separately. We should also examine the expenditures at the institutional level as well but there are no data available to do so.
More than 95% of the state grants for education appear in the budget of the Ministry of the Interior as normative grants for the local governments. These grants amounted to 178 billion HUF in the 1997 budgetary plan. The central support for some other local tasks in public education also appear here (e.g. the earmarked grants for teachers to buy professional literature, for professional developmental projects, for teachers specialised examinations and in-service training, and for the support of some regional or sub-regional tasks). A smaller proportion of the state support appears in the budget of the Ministry of Education. (According to the 1997 budgetary plan 5.6 billion HUF from the total budget of the Ministry served public educational purposes11, such as the earmarked grants for the support of public educational developmental programmes and teacher inset programmes.) So the state support for public education in the budgetary year of 1997 amounted to a total of 184 billion HUF. (It is worth noting here that the budget of the local governments planned 295 billion HUF for the running costs of education.)
For the past few years, and especially after the amendment of the education act, the grants earmarked from the central state support of education have acquired a growing importance. These earmarked grants, as it has been mentioned, appear partly in the budget of the Ministry of Education and partly in the Ministry of the Interior. These grants do not in the main serve the continual operation of public education but target development, structural adaptation or the realisation of the topical priorities of the educational policy. The majority of these resources were also given to the maintainers in 1997 but - as opposed to the central normative grants - the maintainers had to hand over almost all of these grants to the institutions. Since the use of these grants is earmarked afterwards they have to be accounted for exactly. The maintainers can get hold of the earmarked grants via applications. The central government only examines whether the applicants are entitled to these grants or not. Once this is established the applicants in the appropriate target group receive the support on a normative basis.
Within the direct public educational expenditure of the state the support for the dynamic non-local governmental sector (private, church and foundational institutions) is an ever growing item, which appears in the budget of the Ministry of Education. While in 1992 the state support for public education in the non-local governmental sector was 1.1 billion HUF, the corresponding item in 1996 amounted to 5.5 billion HUF. This means a more than twofold growth even in real value. A bigger proportion (62%) of the state support for the non-local governmental sector serves the financing of the denominational schools.
Educational expenditure is by far the biggest item within the expenditures of the local governments. Among the running costs of the local governments in 1995 26.9% was spent on education, 16.8% on health care, 10.9% on the administrative tasks, 5.4% for social welfare, and 4.9% for the tasks of settlement management. The local governments have several resources to cover the costs of public education and of other public tasks. More than one-third of the resources (38% in 1995) come from the direct state grants, large proportions of which (29% of the total state support in 1995) are normative grants. The normative, or per capita, grant for public educational purposes is just one of these central normative grants. The local governments have further significant resources from the revenues of their own institutions, from the locally levied taxes, and from their share of the centrally collected and partly redistributed personal income taxes. The local governments that maintain the institutions of public education can be said to stand on several feet from an economic point of view. The proportion of their own incomes among their revenues is growing, while the proportion of the state support is decreasing. Consequently, the financial situation of public education, which is determined basically by the financial situation of the local governments, is becoming more and more dependent on the local governments' own incomes.
It was a characteristic feature of the connections between the central budget and the local governmental budgets that up till 1995 the proportion increased of those expenditures that the local governments had to cover from their other resources, partly from the non-educational state grants and partly from their own incomes. So the gap between the central normative grants and the actual expenditures of the local governments widened. Due to a significant rise in the public educational normatives this trend came to a halt in 1996 (see Figure 2).
The educational expenditures of the local governments and the central normative support for education, 1991-1996 (million HUF)
Source: Ministry of Education, Department of Public Educational Planning.
Public educational expenditures
As we have seen the size of the amount devoted to public education mainly depends on the budgetary decisions of the local governments. For an overall amount the local governments budgetary accounts have to be added up. According to the data of the Ministry of Finance the central budget devoted 340,562 million HUF to education in 1996, out of which 263,401 million HUF (73%) was the share of pre-primary, primary and secondary education together. This amount was 10.2% higher than the one in the previous year. Despite the budgetary constraints, the growth of public educational expenditures kept pace with the rate of inflation every year between 1991 and 1994. But this tendency was broken by the radical fiscal restrictions introduced by the central government in 1995. In 1995 and 1996 the public educational expenditures of the central budget decreased in real value (see Figure 3).
Growth in educational expenditures and changes in the consumer price index, 1990-1996 (previous year = 100%)
Source: Calculated by Júlia Varga from the data of the Central Statistical Office.
There is a correlation between the changes in the number of pupils and the growth of the public educational expenditure not keeping pace with the inflation rate. The total amount of the state normative grants (the per capita grants) that is given to the maintainers depends on the number of pupils attended by their institutions. The amount of the normative state grant per pupil remained the same between 1993 and 1995 despite the then average 20% inflation rate and the decline in pupil numbers, which meant that the real value of the central educational grants decreased considerably. This tendency only changed in 1996, when the rate of the normative state grants started to increase again. It is important to stress at the same time that the per pupil expenses did not change the same way at every educational level. This indicator, obviously, showed growth at those levels of education where the decline in pupil numbers was sharp: at the general school until 1995 and at the technical school until 1993. In the types of schools - the general and vocational secondary schools - where the pupil numbers rose the growth of the per pupil expenses was slower (see Figure 4).
The growth rate of the total educational expenditure per one student and the consumer price index, 1990-1996 (previous year = 100%)
Source: Calculated by Júlia Varga from the data of the Central Statistical Office; for 1996: the educational statistics of the Ministry of Education.
The expenses in proportion to the gross domestic product (GDP)
To see how public educational expenditures changed in proportion to the gross domestic product in Hungary during the 1990s we have to take into account the whole context of public financing, the trends in economic policy, and the efforts of the government. Public educations share of the gross domestic product grew between 1989 and 1992. The main reason for this was that while the economic crisis made the GDP plummet, during those years the public educational expenditures increased fast or remained unchanged in real value. In other words, the dramatic economic crisis practically did not affect public education until 1992. This was the reason why Hungary at the beginning of the 1990s belonged to those countries which, by international comparison, spent the biggest proportion of their GDP on public education. However, what started in 1992 strengthened by the middle of the decade: a gradual decrease set in in the proportions spent on public education. The rate of the decrease was extraordinary in 1995. According to the data of the Ministry of Finance 5.09% of the GDP was spent on public education in 1994, but only 4.37% in 1995, and a mere 4.06% in 1996 (see Figure 5).
Ratio of the educational expenditure from the GDP, 1989-1996 (%)
Source: Calculated by László Limbacher.
While between 1989 and 1994 the real value of the GDP decreased by about 20%, the public educational expenditure maintained, even increased, its real value until 1992. The real value of the public educational expenditure started to decrease when the GDPs decline in real value had already slowed, and growth began. So the impacts of the economic crisis and the consecutive fiscal restrictions did not reach education parallel with the crisis but years later. This timelag can be explained by the decentralised character of school maintenance: the local decision-makers, who set the actual extent of educational expenditure, responded slowly to the slimming down of the resources. So - though the growth rate of the central state grants remained below the inflation rate - the local maintainers compensated for the inflation from other sources for some time. This was how, compared to other countries, Hungary could spend a much bigger proportion on public education than was explained by its economic productivity. Due to the restrictive measures taken by the central government in 1995 a similar statement would not be valid for today.
The structure of the expenditures
The internal proportions in educational expenditure have changed little, and changed slowly, in the past few years: until 1995 the local decisions preserved the basic proportions given to the different educational levels. While the share of public education from the total educational expenditures stayed around 77-79%, the share of the various educational levels hardly changed between 1990 and 1996 despite the changes in the number of pupils. The educational expenditures of the general school remained around 29-31% even though the number of pupils taught at this level decreased most. The share of secondary education - despite the increase of pupils numbers - stayed around 24-26%. But from 1993 onwards some rearrangement could be perceived between secondary education and vocational education for skilled workers (technical schooling). Within secondary education the expenditure devoted to technical schooling started to decrease with several years of delay (from 1993) though its rate remained below the rate of decrease in pupil numbers. A continual and constant decrease happened only in the indirect expenditures of education, such as the provision of after-school supervision and student hostels.
From 1990 a continual decrease in the capital expenditures can be perceived, as opposed to the running costs of education. The decrease of this rate could be explained by the decline in pupil numbers in the general schools, but until 1996 there was a decrease in capital expenditure in secondary education as well, where the pupil numbers rose by 20% between 1990 and 1995.
Salaries constitute the item of expenditure that proved the most stable up till 1995. The local decision-makers first reduced the proportion of capital expenditure as compared to the running costs of education, then, within the running costs, they cut back on the auxiliary services of education, i.e. on the costs of welfare expenditure. Finally there came a reduction of the material expenditure, for example less and less was spent on professional materials. For a long time the maintainers did not resort to the tool of reducing the number of employees. As a consequence, salaries took up an ever growing proportion of the educational expenditure despite the decrease of their real value. (See Figure 6.) In 1996 the increase of teacher salaries remained much below the rate of inflation: while there was a 23.6% rise in consumer price index, the nominal salaries of those employed in public education rose by an average of 11.7%.
Ratio of salary expenditures from regular educational expenditures, by level of education, 1990-1995 (%)
Source: Calculated by Júlia Varga from the data of the Central Statistical Office.