7. The system of financing and administration

7.1 Financing

As mentioned above, education is financed predominantly from public resources. However, enterprises and other legal entities can also take part in financing. The most important sources of public financing are the state budget and the municipalities' own resources. The greater part of state support is a normative sum per head of students, which depends on the level of education concerned.

The amount of this kind of support did not change between 1993 and 1995 (see Table 7.1). Despite the growing inflation rate, it was not increased until 1996.

The lump sum money is provided for the maintainers of schools which are mainly the municipalities. They can use this amount without any constraint, favour some of the educational institutions they maintain to the detriment of others, and they also can and have to use their own resources. Besides this normative support, they are provided for with other earmarked support from the state budget. These aids must be used for definite purposes, such as the construction of gyms or classrooms.

In 1996 the amount of normative sum per student was raised and differentiated according to the new educational cycles recommended by the new National Core Curriculum. (see Table 7.2)

The expenditure on public education makes up for a considerable part of the budget of the local municipalities. It accounts for over one-third of the total budget. (see Table 7.2)

The proportion of normative support is decreasing in the budget of the municipalities and fell under 50% in 1995. The role of the central budget is diminishing in the financing of the public education system, and the role of the local municipalities is growing.

One of the most vital issues in the field of education in Hungary is the system of financing. The size of the normative sums has not been following the inflation rate for years. Because of the growing proportion of earmarked support till the mid-1990s as well as of the system of the teacher employment and salaries, the financing system curtails the autonomy of the maintainers. Many municipalities have run into debts in order to be able to maintain their schools. Streamlining would hurt many interests. Therefore certain experts press for a reform of the financing system by the implementation of formula funding, i.e. one in which more factors, such as the number of groups, the type of educational tasks, the quality of the building would be taken into consideration in financing educational institutions. (In 1996 the amount of the normative sum per head was increased and for some programmes, as for instance educational programmes for the disadvantaged, for minorities, or for education in schools shared by more villages, the normative sum per head was increased. The 1996 Amendment regulates the number of students in a group, and the number of lessons in certain grades, so it aims at establishing closer links between financing and educational tasks.)

Today enterprises have a relatively more significant role in financing vocational education than before. The firms are obliged to pay 1.5% of their payroll into the Fund for Vocational Education. A part of this amount can be transferred directly to the educational institutions engaged in practical training relevant to the company in question. The Fund is managed by the regional labour councils in a tripartite way (government, trade unions and employers' associations).

7.2 Administration

The administration of Hungarian public education is highly decentralised (see Figure 7.1 on the next page). It is characterised by a system of shared responsibilities, by an educational administration integrated into public administration, and by the strong autonomy of municipalities and schools.

The Ministry of Culture and Education is generally responsible for public education as a whole, but shares this responsibility with other ministries. The Ministry of Home Affairs is responsible for transferring the state support to the municipalities. The Ministry of Labour is responsible for vocational education and training. The affairs of culture, Churches and youth are under the authority of the Ministry of Culture and Education. The minister cannot issue orders for municipalities or schools. His or her task includes the legal regulation and development of certain fields. The work of the ministries responsible for education is assisted by some consultative bodies. The National Council of Vocational Education is a tripartite forum working with the Ministry of Labour. The Council of Public Educational Policy helps reconcile the interests of organisations, the maintainers of schools and of the organisations of experts and parents. The National Council of Public Education plays a role in the development of the content of education.

Municipalities have a substantial role in the administration of public education. In early 1995, there were 3,147 municipalities in Hungary. 2,443 of them maintain some sort of an educational institution. Municipalities make decisions about the establishment, closure, reorganisation and profiles of educational institutions. They determine their budgets, supervise them, they are the employers of the headmasters, and approve fundamental documents such as the local curriculum or the educational programme, as well as evaluate the efficiency of the operation of the institutions. The most vital problem is that small municipalities often lack the competence in managing educational affairs, and have not got any unit or official specialised in education. Co-ordination and administration on the regional level are not solved.

Since the middle of the 1980s schools enjoy autonomy. The principal of the school is the employer of the staff. Schools are empowered by the Education Act to elaborate their own educational programmes (including the school level curriculum prepared by the teaching staff or selected from among existing curricula). The programmes are to be approved by the maintainer. Most of the institutions manage themselves independently on the basis of the budget plan approved by the maintainer. They can have their own sources of income. This independence is relative since it is limited by the uncertain financial position of the maintainers. In the past few years the role of the headmasters has changed: now the principals are responsible for the financial management of schools, and need to tolerate conflicts, run risks, deal with the human resources, and run the school efficiently.