New Basic Education Fund has expanded and improved distribution of resources for state and municipal government schools

The most important change in the New Fundeb involves the calculation of school funding distributed to state and municipal governments and the federal government’s obligation to contribute 10% of the budget to all education-related funds, in addition to the other 10% that was already mandatory.
Economics
09 June 2021
New Basic Education Fund has expanded and improved distribution of resources for state and municipal government schools

The New Basic Education Fund, created by Law 14,113 of 2020, has expanded the distribution of resources for state and municipal governments schools. Thousands of specialists in the area contributed to the fund’s design, including Professor Aloísio Araújo of Fundação Getulio Vargas’ Brazilian School of Economics and Finance (FGV EPGE). Supported by national and international experts, he made some valuable suggestions.

One of Professor Araújo’s most important contributions was to coordinate a webinar called “Childhood Education: Public Policy Evaluation Suggestions for the New Basic Education Fund,” held by the Brazilian Academy of Science on March 23, 2021, which featured Nobel prize winner James Heckman and economist Rodrigo Pinto.

Concerns regarding Brazilian basic education are highlighted in the 1988 Constitution. The most recent development in this area was the New Basic Education Fund, approved in 2020, which aims to correct inequalities between municipalities and focus more on early childhood education. Studies carried out by the webinar’s guests show that there ought to be a multidisciplinary and unified lifecycle strategy, including investment in children’s education and physical health, focusing on birth to five years of age. Public policies of this kind generate returns on investment by reducing inequalities and giving people the skills needed to lead successful lives and be productive.

According to the professor, one of the New Basic Education Fund’s innovations is that it makes the choice of complementary courses more flexible by allowing institutions to hire external suppliers. He gives the example of a student who is doing a vocational tourism course and wants to learn new languages. Instead of sticking to the options that exist at his or her school, more specific education is now available at other schools.

However, the most important change in the New Fundeb involves the calculation of school funding distributed to state and municipal governments and the federal government’s obligation to contribute 10% of the budget to all education-related funds, in addition to the other 10% that was already mandatory. According to Araújo, this measure alone guarantees extra resources. It is now necessary to ensure that these resources reach everyone.

Araújo says that before the Basic Education Fund, the Constitution specified a percentage of resources that had to be spent on education. However, the poorest municipalities and states were unable to spend all this money and states had to direct these resources to other municipalities. As a result, the first Basic Education Fund changed the spending criterion to the number of enrolled students, but the issue of tax income inequality was only resolved by the New Basic Education Fund. The law also provides that each state government must spend a minimum amount per student, benefiting states with lower income.

Under the New Basic Education Fund, the federal government must allocate an additional 10% of its resources to education, on top of the 10% that was already required. The federal government must therefore now assign 20% of its resources to education. A minimum amount of spending per municipality is provided for, which eliminates the disadvantages of municipalities with lower tax income. The number of students is used to allocate 10% of spending, and of the 10% of resources required by the New Basic Education Fund, half goes to basic education at public schools.

The age group covered by these resources is now four to 17 years, rather than seven to 14 as before. The level of family income is also used as a criterion for allocating resources to some age groups.

According to Araújo, there is a third step, which involves a complementary component of 2.5% for municipalities that spend their education resources in the best way. This rule was inspired by the state government of Ceará, which transfers a percentage of its ICMS tax revenue to the best municipalities. Today, all municipalities in Ceará have satisfactory education indicators. This system is now applicable to other states.

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