Indicator C4. What is the total government spending on education?
Total government spending on education (from primary to tertiary level) averages 10% of total government expenditure across OECD countries, ranging from around 6% to 16%. The largest share of government funding is devoted to primary and secondary levels, explained by near-universal enrolment rates at those levels of education and the greater contribution of private sources at tertiary level.
Between 2019 and 2020, even where government expenditure on education increased, it fell as a share of other government spending. The proportion of government expenditure devoted to education fell by 6.5% on average across OECD countries. This is due to the COVID-19 pandemic that pushed governments to spend a considerable share of their budget to support their economies.
At upper secondary level, OECD and partner countries are more or less evenly divided between those allocating a greater share of government expenditure to general education and those allocating a greater share to vocational education. On average, each programme orientation receives 1.1% of total government expenditure.
Context
Public expenditure enables governments to serve a wide range of purposes, including providing education and health care and maintaining public order and safety. Decisions about budget allocations to different sectors depend on countries’ priorities and the options for private provision of these services. Education is one area in which all governments intervene to fund or direct the provision of services. As there is no guarantee that markets will provide equal access to educational opportunities, governments need to fund educational services to ensure that education is not beyond the reach of some members of society.
Policy choices and external shocks, such as demographic changes or economic trends, can have an influence on how government funds are spent. Like the financial crisis in 2008, the COVID-19 pandemic had significant economic effects on societies, and education was one of the sectors hit. Past economic crises have put pressure on public budgets, resulting in less government funding being allocated to education in some countries. Budget cuts can represent improved allocation of government funds and may generate gains in efficiency and economic dynamism, but they can also affect the quality of government-provided education, particularly at times when investment in education is important to support learning acquisition and economic growth.
This indicator compares total government spending on education with total government expenditure across OECD and partner countries. This indicates the priority placed on education relative to other public areas of investment, such as health care, social security, defence and security. It also includes data on the different sources of government funding in education (central, regional and local governments) and transfers of funds between these levels of government. Finally, it covers how government expenditure has changed over time.
In contrast to Indicators C1, C2 and C3, which focus only on spending on educational institutions, government expenditure on education covers expenditure on educational institutions and expenditure outside educational institutions such as support for students’ living costs and other private expenditure outside institutions.
Other findings
Government expenditure can represent a large share of GDP, also beyond the education sector. While government expenditure on education does not exceed 8.0% of gross domestic product (GDP) in any OECD country, over a third of OECD countries reported that total government expenditure (on all services) accounted for more than half of GDP in 2020.
At upper secondary level, central governments provide the largest share of government funding in most OECD countries even after transfers between government levels. On average, central governments provide more than 60% of government funding in upper secondary vocational education, compared with 53% in upper secondary general programmes.
On average across OECD countries, the tertiary level accounted for 27% of total government expenditure on education. The share is the lowest in Luxembourg (14%) due to the significant share of national tertiary students who are enrolled abroad.
Government resources invested in the different levels of education
In 2020, total government expenditure on primary to tertiary education as a percentage of total government expenditure for all services averaged 10% in OECD countries. However, this share varies across OECD and partner countries, ranging from around 6% in Hungary to nearly 16% in Chile (Table C4.1).
Overall, most government funding was devoted to non-tertiary levels of education in 2020. In most countries, and on average across OECD countries, roughly three-quarters of total government expenditure on primary to tertiary education (7.3% of total government expenditure) was devoted to non-tertiary education (i.e. primary, secondary and post-secondary non-tertiary education) (Table C4.1). This is largely explained by the near-universal enrolment rates at non-tertiary levels of education (see Indicator B1), the shorter duration of tertiary education relative to the combined length of primary and secondary education, and the fact that in OECD countries, on average, the funding of tertiary education depends more on private sources than it does at non-tertiary levels.
Early childhood education (ECE) is generally excluded from statistics on the total government expenditure on education because of the very diverse nature of systems across OECD countries. There are variations in the targeted age groups, the governance structures, the funding of services, the type of delivery (full-day versus part-day attendance) and the location of provision, whether in centres or schools, or at home (see Indicator B2). On average across OECD countries with data, ECE represents 1.6% of total government expenditure, ranging from 0.3% in Japan to 3.6% in Iceland. The varying nature of the organisation of ECE systems can help explain this wide range (Table C4.1, available on line).
In all OECD countries with data, except in Denmark and Norway, government expenditure on pre-primary education exceeds the expenditure devoted to early childhood educational development programmes (Table C4.1, available on line). In Norway, governmental expenditure is equivalent at both levels even if more children are enrolled in pre-primary education, while in Denmark more governmental expenditure goes to early childhood educational development programmes even if it enrols less children than pre-primary education.
In 2020, on average across OECD countries, general and vocational upper secondary education each received 1.1% of total government expenditure. This apparent similarity masks differences in the countries themselves. Across OECD member and partner countries, about the same number of countries allocate a larger share of government expenditure to general upper secondary education as allocate a larger share to upper secondary vocational education. The countries allocating the largest shares of government expenditure to vocational programmes are Belgium and the Republic of Türkiye (each 1.8%). Conversely, the countries devoting the largest share to upper secondary general education are Israel (2.9%) and Chile (2.5%) (Table C4.1 and Figure C4.1). This reflects the importance of the different programme orientations in these countries. For example, in Belgium, 56% of enrolment in upper secondary education in 2020 was in vocational programmes, partly explaining why government spending on upper secondary vocational programmes is higher than on general ones (OECD, 2023[2]).
The share of government education expenditure devoted to tertiary education also varies widely across countries, often influenced by the varying levels of investment in research and development. On average, government expenditure in OECD countries on tertiary education, including expenditure on research and development, amounted to 27% of total government expenditure on primary to tertiary education. Across OECD and partner countries, the share ranges from below 14% in Luxembourg to over 38% in Austria and Denmark (Table C4.1). Over three-quarters of Luxembourg’s national tertiary students are enrolled abroad (see Indicator B6), explaining the low share of government expenditure devoted to tertiary education.
When considering government expenditure on education as a share of total government expenditure, the relative sizes of public budgets should also be taken into account. The share of total government expenditure as a proportion of GDP varies greatly among countries (Table C4.1, available on line). In 2020, over one-third of OECD countries reported that their total government expenditure on all services amounted to more than half of GDP. A large share of total government expenditure devoted to education does not necessarily translate into a large share relative to a country’s GDP. For example, Ireland allocates 12% of its total government expenditure to primary to tertiary education (more than the OECD average of 10%), but relative to GDP its expenditure is relatively low (3.2% compared to the OECD average of 4.7%). This could be linked to Ireland’s GDP being inflated by the large number of tech companies which have their legal headquarters in Ireland for tax purposes (Table C4.1, available on line).
Sources of government funding invested in education
The division of responsibility for education funding across levels of government (central, regional and local) is an important aspect of education policy. Decisions on education funding are taken both at the level of government where the funds originate, and at the level of government where they are ultimately spent. The originating level of government decides on the amount of funding and imposes conditions on the use of funds, while the ultimate spending level of government has varying levels of discretion over how funds are spent.
Education funding may be mostly centralised or decentralised with funds transferred between levels of government. High levels of centralisation can cause delays in decision making and decisions that are taken far from those affected can fail to address local needs. Conversely, in highly decentralised systems, different geographical areas may spend different amounts of educational resources on students, either due to differences in priorities related to education or to differences in their ability to raise funding. Wide variations in educational standards and resources can also lead to unequal educational opportunities in highly decentralised systems. However, the results of the OECD Programme for International Student Assessment (PISA) suggest that when autonomy and accountability are appropriately combined, they tend to be associated with better student performances (OECD, 2016[3]). In recent years, many schools have become more autonomous and decentralised, as well as more accountable to students, parents and the wider public for their outcomes.
Different government levels tend to be responsible for funding different levels of education. Typically, government funding on tertiary education is more centralised than for lower levels of education. In 2020, on average across OECD countries, 59% of government funds for non-tertiary education came from the central government (before transfers to the various levels of government), compared to 88% of government funds for tertiary education (Table C4.2).
A large share of central government funds for primary and secondary education are transferred to lower levels of government. On average across OECD countries, the share of government funds for non-tertiary education provided by the central government falls from 59% to 45% after transfers to other levels of government have been accounted for, while the share of local funds rises from 25% to 40%. There is a great deal of variation in how much the sources of funds change before and after transfers from central to lower levels of government. In Korea, Lithuania, Mexico, Poland and the Slovak Republic, the difference is more than 50 percentage points after transfers to regional and local governments. In Austria, Chile and Latvia, the difference is more than 30 percentage points. In Canada and the United States, where the regional level is mostly responsible for transferring funds to schools, the share of regional funding falls by 40 percentage points or more after transfers to local levels of government (Table C4.2).
For upper secondary vocational education, central governments provide the largest share of government funding even after transfers in most OECD countries. On average, central government accounts for 63% of government funding in upper secondary vocational education after transfers, while in upper secondary general programmes it is only 53%. The difference is particularly large in Latvia where the central government provides 12% of government expenditure on general programmes, but 96% of government expenditure on vocational ones (Figure C4.2).
On average, the regional level of government make the smallest contributions of the three levels of government to upper secondary vocational education (16%). However, in Australia, Belgium, the Czech Republic, Germany, Spain and Switzerland regional governments are responsible for the largest part of government funding. After transfers, local governments make a significant contribution to upper secondary funding, accounting for 33% of government spending on general education and 21% on vocational education. In Finland, Norway, Poland, the Slovak Republic and Sweden, local governments are the largest government contributors to upper secondary vocational education with over 70% of government expenditure coming from this level after transfers between levels of government. As well as transfers between levels of government, private companies may also receive financial transfers from the government for the work-based component of VET programmes (Box C4.1 and Box C3.1).
In most OECD and partner countries with available data, central government directly provides more than 60% of government funds in tertiary education; in 37 out of 41 countries with data, the central government is the main source of both initial and final funding. In contrast, in Spain, as well as federal countries such as Belgium, Germany and Switzerland, over 65% of tertiary-level funding comes from regional governments with little or nothing transferred down to local governments. Local authorities typically do not have an important role in financing tertiary education, representing only 1% of both initial and final government funds on average, with the exception of the United States where local governments provide 9% of total expenditure at this level (Table C4.2).
Governments are the main funding source for VET teachers’ salaries in Austria, Belgium (French and Flemish community), Brazil, Chile, Denmark, Estonia, France, Germany, Japan, Korea, New Zealand, Sweden and Switzerland. In another group of countries, VET teachers are paid through a combination of funding from government and private educational institutions (Colombia, Finland, Latvia, Lithuania, Norway, Spain, Türkiye and the United States (at post-secondary non-tertiary level)). Capital expenditure, such as IT and machinery in VET schools (or other provider institutions) are funded in a similar manner in most countries: either the government is the main source of funding, or a combination of the government and private educational institutions. Public and private companies make limited financial contributions to the school-based component of vocational programmes. Very few countries report companies as a funding source; one exception is Sweden, where companies may sometimes supply instructors or provide machinery to support school-based learning (Figure C4.3).
According to the UNESCO-OECD-Eurostat (UOE) classification of educational expenditure, educational core goods and services include training in the context of combined school- and work-based programmes. Expenditure by private companies and public subsidies towards such work-based learning should be regarded as expenditure by independent private educational institutions. This should include the salaries of instructors (and other personnel) and the cost of instructional material and equipment, but exclude apprentices’ wages or other compensation paid to students. In practice, constraints on data availability mean there is a great deal of variation in how countries report expenditure within companies. Most countries lack data on expenditure on the wages of in-company trainers or instructional material and equipment (apprentices’ wages are not reported either, but those should be excluded according to UOE guidance).
Even among countries where apprentices account for one-quarter or more of upper secondary VET students (see Box B1.3), there is much variation in reporting. Germany and Switzerland are the only countries that provide estimates of expenditure on the work-based component (including trainers’ wages and equipment). Norway only reports subsidies in the context of expenditure on work-based learning, as do Finland and Spain, which make less use of work-based learning. In Norway, the amount of the subsidy is based on the rationale that of the two years spent in a company, the apprentice will spend half the time learning and half the time working. Companies therefore receive a grant from the government as compensation for the cost of taking on the instruction of apprentices. Finally, many countries report no data on expenditure within companies. These include Austria and France, despite relatively large apprenticeship programmes (enrolling over one-quarter of VET students), as well as the French Community of Belgium, Norway and Sweden.
Source: INES qualitative data collection on VET financing (2023). For more information see Source section and Education at a Glance 2023 Sources, Methodologies and Technical Notes (OECD, 2023[1]).
Trends in government expenditure on education, 2019-20
Between 2019 and 2020, total government expenditure and government expenditure on education both increased in most OECD countries. On average, government spending on primary to tertiary education increased by 2.1%, while total government expenditure on all services increased by 9.5% (Figure C4.4). Total government expenditure increased due to several factors during the COVID-19 pandemic. For example, governments implemented fiscal stimulus measures to support businesses, industries and individuals affected by lockdowns and circulation restrictions. The emergency healthcare response involved expanding testing and vaccination capabilities, acquiring medical supplies and equipment, and providing healthcare workers with necessary resources, contributing to the overall increase in total government spending.
On the education side, governments invested in various aspects of remote learning infrastructure, including technology, online learning platforms and teacher training for virtual instruction. Governments have allocated funds to support students and educational institutions by providing devices or Internet access to disadvantaged students to bridge the digital divide, and supporting schools in implementing health and safety protocols. These financial support mechanisms have contributed to the increase in government expenditures on education.
However, there are some notable exceptions: Brazil, Chile, Costa Rica, Hungary, and Türkiye, all reported reductions of at least 5% in government spending on education between 2019 and 2020, in constant prices (Figure C4.4). Türkiye is the only country where total government expenditure also fell over this period. Although its total government expenditure increased in nominal terms, the increase was lower than the inflation rate, resulting in a reduction in constant prices. This is likely to remain the case in 2021, 2022 and 2023, when inflation was very high in Türkiye (Central Bank of the Republic of Türkiye, 2023[4]).
Eleven OECD member and partner countries have data on government expenditure on education for 2021. The figures show that most governments continued to increase their support for education into the second year of the COVID-19 pandemic. In Slovenia and Spain, government expenditure on primary to tertiary education increased by more than 5% between 2020 and 2021. In contrast, government expenditure on education decreased in Costa Rica, Lithuania, South Africa and Türkiye over this period (Figure C4.5).
Breaking down overall expenditure by level of education shows interesting trends, with increases for primary, secondary and post-secondary non-tertiary surpassing those for tertiary education by at least 5 percentage points in Israel, New Zealand and Slovenia. The largest difference in favour of tertiary education is observed in Türkiye where the gap reaches 15 percentage points, while the largest difference in favour of primary, secondary and post-secondary non-tertiary education is observed in New Zealand (12 percentage points) (Figure C4.5). In New Zealand, the declining figure for tertiary education is caused by a decline of government transfers in the form of student loans, if student loans were excluded, government expenditure on tertiary education would be increasing by 4% between 2020 and 2021.
It is often difficult to find a simple explanation for the differences in changes in expenditure across OECD countries. Although the COVID-19 pandemic may have contributed to some of it, changes in education spending are driven by multiple other factors. For example, demographic changes leading to a falling student population may lead to reductions in expenditure on education. Changes in education policies, such as expanding educational infrastructure or increasing teachers’ salaries, also have an impact on education spending. A small number of countries have provisional data on government expenditure on education in 2021, providing an opportunity to have a comparative look at the trends going into the second year of the COVID-19 health crisis (Box C4.2).
Intergovernmental transfers are transfers of funds designated for education from one level of government to another. They are defined as net transfers from a higher to a lower level of government. Initial funds refer to the funds before transfers between levels of government, while final funds refer to the funds after such transfers.
Government expenditure on education covers expenditure on educational institutions and expenditure outside educational institutions such as support for students’ living costs and other private expenditure outside institutions, in contrast to Indicators C1, C2 and C3, which focus only on spending on educational institutions. Government expenditure on education includes expenditure by all government entities, including the education ministry and other ministries, local and regional governments, and other public agencies. OECD countries differ in the ways in which they use government money for education. Government funds may flow directly to institutions or may be channelled to institutions via government programmes or via households. Government funds may be restricted to the purchase of educational services or may be used to support students’ living costs.
All government sources of expenditure on education, apart from international sources, can be classified under three levels of government: 1) central (national) government; 2) regional government (province, state, Bundesland, etc.); and 3) local government (municipality, district, commune, etc.). The terms “regional” and “local” apply to governments with responsibilities exercised within certain geographical subdivisions of a country. They do not apply to government bodies with roles defined in terms of responsibility for particular services, functions or categories of students that are not geographically circumscribed.
Total government expenditure corresponds to non-repayable current and capital expenditure on all functions (including education) of all levels of government (central, regional and local), including non-market producers (e.g. providing goods and services free of charge, or at prices that are not economically significant) that are controlled by government units, and social security funds. It does not include expenditure derived from public corporations, such as publicly owned banks, harbours or airports. It includes direct government expenditure on educational institutions (as defined above), as well as government support to households (e.g. scholarships and loans to students for tuition fees and student living costs) and to other private entities for education (e.g. subsidies to companies or labour organisations that operate apprenticeship programmes).
Figures for total government expenditure and GDP have been taken from the OECD National Accounts Statistics Database (see Annex 2).
Government expenditure on education is expressed as a percentage of a country’s total government expenditure. The statistical concept of total government expenditure by function is defined by the National Accounts’ Classification of the Functions of Government (COFOG). There are strong links between the COFOG classification and the UNESCO, OECD and Eurostat (UOE) data collection, although the underlying statistical concepts differ to some extent (Eurostat, 2019[5]).
Expenditure on debt servicing (e.g. interest payments) is included in total government expenditure, but it is excluded from government expenditure on education, because some countries cannot separate interest payments for education from those for other services. This means that government expenditure on education as a percentage of total government expenditure may be underestimated in countries in which interest payments represent a large proportion of total government expenditure on all services.
For more information, please see the OECD Handbook for Internationally Comparative Education Statistics 2018 (OECD, 2018[6]) and (OECD, 2023[1]), Education at a Glance 2023 Sources, Methodologies and Technical Notes, for country-specific notes.
Data refer to the financial year 2020 (unless otherwise specified) and are based on the UNESCO, OECD and Eurostat (UOE) data collection on education statistics administered by the OECD in 2022 (for details see (OECD, 2023[1]), Education at a Glance 2023 Sources, Methodologies and Technical Notes.
Data from Argentina, China, India, Indonesia, Peru, Saudi Arabia and South Africa are from the UNESCO Institute of Statistics (UIS).
The data on expenditure for 2019-20 were updated based on a survey in 2022-23 and adjusted to the methods and definitions used in the current UOE data collection. Provisional data on educational expenditure in 2021 are based on an ad-hoc data collection administered by the OECD and Eurostat in 2022.
References
[4] Central Bank of the Republic of Türkiye (2023), Consumer Prices, https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Statistics/Inflation+Data/Consumer+Prices (accessed on 26 May 2023).
[5] Eurostat (2019), Manual on Sources and Methods for the Compilation of COFOG Statistics: Classification of the Functions of Government, European Commission, Luxembourg, https://doi.org/10.2785/498446.
[1] OECD (2023), Education at a Glance 2023 Sources, Methodologies and Technical Notes, OECD Publishing, Paris, https://doi.org/10.1787/d7f76adc-en.
[2] OECD (2023), Education at a Glance Database, https://stats.oecd.org/.
[6] OECD (2018), OECD Handbook for Internationally Comparative Education Statistics 2018: Concepts, Standards, Definitions and Classifications, OECD Publishing, Paris, https://doi.org/10.1787/9789264304444-en.
[3] OECD (2016), PISA 2015 Results (Volume II): Policies and Practices for Successful Schools, PISA, OECD Publishing, Paris, https://doi.org/10.1787/9789264267510-en.
Cut-off date for the data: 15 June 2023. Any updates on data can be found on line at: https://doi.org/10.1787/eag-data-en. More breakdowns can also be found at: http://stats.oecd.org, Education at a Glance Database.
Table C4.1. Total government expenditure on education as a percentage of total government expenditure (2020) |
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Initial sources of funds, by level of education |
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Note: See StatLink and Box C4.3 for the notes related to this Table. |
Source: OECD/UIS/Eurostat (2023). For more information see Source section and Education at a Glance 2023 Sources, Methodologies and Technical Notes (OECD, 2023[1]). |
Table C4.2. Distribution of sources of total government funds devoted to education, by level of government (2020) |
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Percentage of total government expenditure, before and after transfers, by level of education |
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Note: See StatLink and Box C4.3 for the notes related to this Table. |
Source: OECD/UIS/Eurostat (2023). For more information see Source section and Education at a Glance 2023 Sources, Methodologies and Technical Notes (OECD, 2023[1]). |
Table C4.3. Change in government expenditure on education as a percentage of total government expenditure between 2019 and 2020 |
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In per cent, initial sources of funds, by level of education and year; reference year 2015 = 100, constant prices |
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Note: See StatLink and Box C4.3 for the notes related to this Table. |
Source: OECD/UIS/Eurostat (2023). For more information see Source section and Education at a Glance 2023 Sources, Methodologies and Technical Notes (OECD, 2023[1]). |
Table C4.1 Total government expenditure on education as a percentage of total government expenditure (2020)
The government expenditure presented in this table includes both government transfers and payments to the non-educational private sector which are attributable to educational institutions, and those to households for living costs, which are not spent in educational institutions. Therefore, the figures presented here (before transfers) exceed those for government spending on institutions found in Indicators C1, C2 and C3. Data on government expenditure on early childhood education (Columns 16 to 18) and on government expenditure as a share of GDP (Columns 19 to 22) are available for consultation on line (see StatLink).
2. Post-secondary non-tertiary figures are treated as negligible.
4. Upper secondary vocational programmes include lower secondary vocational programmes.
6. Data do not cover day care centres and integrated centres for early childhood education.
Table C4.2 Distribution of sources of total government funds devoted to education, by level of government (2020)
Some levels of education are included with others. Refer to "x" code in Table C4.1 for details. Data on early childhood education (Columns 19 to 36) and on upper secondary general and vocational education (Columns 37 to 42) are available for consultation on line (see StatLink below).
3. Upper secondary vocational programmes include lower secondary vocational programmes.
5. Data do not cover day care centres and integrated centres for early childhood education.
Table C4.3 Change in government expenditure on education as a percentage of total government expenditure between 2019 and 2020
The government expenditure presented in this table includes both government transfers and payments to the non-educational private sector which are attributable to educational institutions, and those to households for living costs, which are not spent in educational institutions. Therefore, the figures presented here (before transfers) exceed those for government spending on institutions found in Indicators C1, C2 and C3. Data on early childhood education (Columns 8 to 13) and on upper secondary general and vocational education (Columns 14 to 17) are available for consultation on line (see StatLink below).
2. Upper secondary vocational programmes include lower secondary vocational programmes.
3. Data do not cover day care centres and integrated centres for early childhood education.
For more information see Definitions, Methodology and Source sections and Education at a Glance 2023 Sources, Methodologies and Technical Notes (OECD, 2023[1]).
Data and more breakdowns are available in the Education at a Glance Database (http://stats.oecd.org/).
Please refer to the Reader's Guide for information concerning symbols for missing data and abbreviations.