Education Finance in Egypt: Problems and a Possible Solution

Egypt, currently in the throes of major political change, will likely undergo reforms of various sorts in the next few years. Some of these reforms are likely to give local entities, including schools, greater control over education finances. In 2007, the Government of Egypt began to decentralize some non-personnel recurrent finances from the center—the Ministry of Education and the Ministry of Finance (MOF)—to lower-level jurisdictions, including schools, using a number of simple and transparent enrollment- and poverty-based funding formulas. By 2010, a sizable amount of capital expenditure was also being transferred to lower levels of the system via similar equity- based funding formulas. Prior to these formula-based decentralization efforts, a large amount of education-related non-personnel recurrent finances had already been moving from the MOF to the muderiyat, education offices at the governorate level of the system. Analysis of these latter allocations reveals that they are highly inequitable on an inter-governorate per-student basis, ranging from EGP 966 per student in New Valley to EGP 25 per student in 6th of October. This paper examines the nature and potential causes of this inequity and espouses a way in which these funds could be transferred using an equity-based funding formula that holds harmless those muderiyat that would lose absolute amounts of money under such a more equitable distribution scheme.