The Financing of Education

In Thailand, the fiscal year begins on 1 October and ends on 30 September of the following year. The sources of educational finance can be classified in five categories: central government budget, local funding, non-governmental budget, foreign loans and technical assistance, and provision of education by the private sector.

Government funding has been the main source of financial resources for educational development. On the average, during the period 1987-97, the total government spending on education equalled 3.16% of Gross Domestic Product (GDP) or 18.64% of the total expenditure.

In 1997, the government budget for education amounted to 214,297 million baht, representing 22% of the total public expenditure and 4.1% of GDP. In 1998, due to the impact of the economic crisis, the total government budget for education decreased to 201,707 million baht or about 3.5% of GDP; however, it represents 25.2% of the total expenditure. The budget appropriation for education approved by the Parliament for the fiscal year 1999 is about 209,920 million baht or about 25.4% of the total budget. The education sector has received the largest share of the total public expenditure since 1991. In 2002, the share of education represented 4% of GDP and 22.1% of the national budget.

Since 1987, more than half of the central government budget has been allocated to pre-primary and primary education, declining from 58.8% in 1987 to 50.4% in 1997 (44.2% in 1998). The shares of higher education and non-formal education have risen substantially between 1987 and 1997 (15.4% and 2.8% respectively in 1997) while the shares of secondary education, vocational education and teacher education have not changed markedly (16.5%, 6.7% and 3.2% respectively).

The local administrative authorities have allocated their own budgets to finance local education. Besides, the central government has also provided an educational budget to subsidize the provision of education by the local authorities. As for the Bangkok Metropolitan Administration (BMA), the total educational budget has increased from 1,875.6 million baht in 1991 to 4,053.8 million baht in 1997. It should be noted that this budget is subsidized by the central government which is the major source of educational expenditure of BMA. From 1991 to 1997, the share of central government subsidies has been fluctuating between 73.7 and 77.0%. In 1997, the share of the local budget for education amounts to 932.8 million baht or about 23% of the total educational budget. The BMA has allocated only a small portion from its own budget for education. Although the budget expenditure of BMA increased from 527.1 to 810.6 million baht from 1992 to 1996, the share of educational expenditure in the total BMA’s expenditure on the contrary decreased from 5.1% in 1992 to 4% in 1996, and the education sector had the smallest share in the total BMA budget expenditure. Regarding the Department of Education of BMA, the major source of educational expenditure comes from the central government subsidies. From 1991 to 1997 the share of central government subsidies fluctuated between 73.7 and 77%.

With respect to local funding of the municipalities, the major source of educational expenditure also comes from central government subsidies. The central government subsidies for local education of the municipalities have remarkably increased from 2,693.7 million baht in 1994 to 4,153 million in 1997. The largest proportion of the central government subsidies for local education of all municipalities has been allocated for primary education programmes. As regards the distribution of local expenditure for education, the municipalities have provided a much smaller percentage of local educational expenditure than the central government due to the small sums of their own revenue collected.

Another source of income for education comes from tuition fees paid by students’ families. They become the revenue of educational institutions which can be used to supplement the government budget revenue. However, there is a considerable difference between tuition fees of public and private schools, and among various levels and types of education in public schools. It is observed that tuition fees for public university students account for only 2.6% of the total operating cost per capita, while those for public lower and upper secondary school students are 3.9 and 6.8% of the total cost per capita. Public university students, thus, pay relatively less for their education than students at other levels. As a result, tuition fees, especially for higher education, should be increased to reflect the true cost of education. As there has been rapid expansion of education in spite of scarce resources, particularly at secondary and higher levels, the student loan programme has been initiated since 1996 to provide educational opportunities for students from low-income families to study at secondary and undergraduate levels.

Foreign loans for educational development in Thailand have come from the World Bank, International Development Association (IDA), Asian Development Bank (ADB) and Overseas Economic Co-operative Fund (OECF). Technical assistance has been in various forms, for example, services of experts and volunteers, scholarships, equipment and grants. However, the amount of foreign borrowing for educational development has began to decrease as the government imposed restrictions on public external borrowing. Technical assistance from abroad has also gradually decreased.