The Ministry of Finance has examined the new draft law “On Education” and the corresponding feasibility considerations and can advise as below.
The Ministry of Finance does support the reform of education as one of the priorities of the Government of Ukraine. In the course of the budget reform, the reform of education was acknowledged as one of the top priorities and received a full-scale funding in the state budget for 2017.
The goal of the Ministry of Finance in the reform of education is to improve the quality of education services by changing the funding mechanisms, upgrading the prestige of the teaching profession and meeting the need of the society and economy for highly qualified workforce.
In 2016, the Ministry of Finance initiated a number of changes in the funding of education which were approved by the Government and the President. They include significantly increased spending on education, improvements in the system of scholarships funding, enhancement of school and vocational education, more autonomy for higher education institutions, 50% higher salaries for teachers, support for approx. 9.000 children with special educational needs, creation of 178 hub schools, ensuring access to high-quality education for children from rural areas etc.
The Ministry of Finance will continue to support the implementation of necessary changes in education, this reform must be continued.
For instance, the draft budget resolution for the period from 2018 till 2020 contains additional 2.4 billion hryvnas for the implementation of the project “New Ukrainian School”.
The draft law “On Education” developed by the MPs is an important step for the continuing reform of the education system. At the same time, it must well-founded in terms of funding and be in line with the spending capacities of the state budget.
“The presented draft law does not have the necessary funding. The three-year Budget Resolution does not contain resources for its implementation. Capacities of the state budget and the economy must be taken into account. The adoption of this draft law as it is would be just another populist step, so what sense does it make to adopt laws which can’t be funded?”, Minister of Finance O. Danyliuk said.
According to the presented draft law, the increase of the basic salary for teachers to 4 living wages within 5 years alone would require additional spending exceeding 160 billion hryvnas.
No doubt, the teachers’ salaries must be increased, and it was done this year. However, this should not create disbalances in the remuneration of the entire public sector including healthcare, culture, social welfare, sport etc.
Funding is also missing for the creation of new central bodies of executive power – the State Agency for the Quality of Education and its local offices as well as the National Agency for Qualification and Certification of Teachers etc.
Apart from that, setting salaries, search for the corresponding funding sources as well as the creation of new bodies of executive power belong to the exclusive area of responsibility of the Cabinet of Ministers which must address this task for the entire public sector.
The presented draft law can only be implemented by firing more than a half of the teachers and other education employees, cutting defense spending or by significantly increasing the state budget deficit and the state debt which is not acceptable.
According to Deputy Minister of Finance Sergiy Marchenko, the funding for this draft law needs a well-balanced approach, all pros and contras must be taken into consideration. The Ministry of Finance must ensure the budget balance and act on the basis of actual revenues and available capacities instead of the spending and spending wishes. Reforms in this or that area shall not jeopardize the budget balance.
“We have changed our approach to budgeting – spending must be based on revenues. We must live the way we can afford. Public spending can only be increased, if the economic performance of the country improves.
As far as the new draft law on education is concerned, we must move step by step to our final goal and take into account our actual capacities. The state budget is not made of rubber and can’t meet all wishes. State policy must be well-balanced, reforms started in some area must stimulate reforms in other directions”, Sergiy Marchenko said.