Education Finance in Practice

Education finance can sometimes seem overwhelming. It’s about taxes, grants, budgets, cost-effectiveness, sustainability, resource mobilization, public financing, impact bonds, credit authority, and many other topics.

When it comes to implementing programs, managers must think about how to manage financial resources in all program development phases. Depending on the nature of the education program, the context you’re working in, and the scope of work you’re tasked with, this can be done using a few different approaches. 

Let’s look at some strategies and tools from the Education Finance How-To Note that you can use to integrate education finance into the four phases of the USAID program cycle:

1. Strategic Planning Phase
This is the phase where you examine the big picture of a country or a geographic region and identify the information you need to analyze education financing in a particular context.

The best way to start is with the national education policy dialogue. Find the most up-to-date studies and analysis of the sector, including information about education finance and both public and private resources. Be on the lookout for education sector assessments, policy documents, and political economy analysis related to the country or region you’re working in. International organizations and development banks are good sources for this information. 

Also, in line with USAID’s Private Sector Engagement Policy, remember to identify, map, and consult with the private sector to define respective priorities and potential areas of collaboration. Determine how best to advance USAID’s four key areas of intervention contained in the Framework for Engagement in Education Finance. Lastly, consider issues of gender, equity, and disability as you move forward with the education policy dialogue.

As you assess USAID’s country-level focus, consider what you know or need to know about a country’s education sector and how it is financed. Consider and familiarize yourself with key USAID documents, such as the Education Policy, the Self-Reliance Roadmaps, and the Political Economy Analysis Framework. USAID University also offers training to help you understand how to leverage financial resources for education. 

2. Project Design and Implementation Phase
Any analysis or assessment you have from the first phase of the program cycle should inform this next phase. By now, you have a good understanding of the big picture of the education sector, financing, and where additional resources might come from. The analysis in this phase digs deeper and influences the project design to ensure it addresses aspects of education finance that USAID can support in an education project, including the use of the twin-track approach to education finance. It should be specific enough to provide recommendations that the project will take on.

Here are some examples of information that are useful in this phase: 

• How much do households contribute toward primary education?
• Are learning materials delivered in a timely fashion?
• What role do non-state schools play in early childhood and primary education?
• What are the potential sources of financial support for youth work training?

Having a contextual risk analysis of the public sector will also be helpful. You can take a look at USAID’s Public Financial Management Risk Assessment Framework (PFMRAF) Manual. If you work in a country affected by conflict or crisis, USAID’s Rapid Education and Risk Analysis (RERA) Toolkit is a useful tool. This is also the time to consider what approaches to take regarding education finance and whether or not a Government to Government (G2G) approach or a Development Credit Authority (DCA) loan guarantee is appropriate and feasible for the program. 

3. Activity Design and Implementation Phase
Program managers can use different approaches and tools to design and implement education finance activities in this phase. USAID can help partner governments by working together to address public financial management challenges, such as preparing education budgets and accounting for how public funds are spent. USAID’s implementing partners can also work with civil society groups to strengthen their public accountability role in education and participate in budget planning. The Uganda Governance, Accountability, Participation and Performance program used these approaches to help civil society organizations effectively engage with lawmakers on budget allocations for health, education, and agriculture. 

Another useful approach to leverage financing for development is the Development Innovation Venture (DIV) procurement mechanism. DIV, which is managed by USAID’s Global Development Lab, offers opportunities to both nonprofit and for-profit organizations for flexible grant funding to test new ideas and scale the most effective solutions. DIVs can be used to support organizations or entrepreneurs piloting innovations. In Jordan, for instance, DIV awarded a grant to T21 Technology, which provides a social learning platform that delivers a suite of services to graduating students, including career navigation, skills-building, mentorship, and employment networking.

Other approaches and tools you can use to implement both finance-focused and finance-integrated activities during this phase include the Global Alliance Development (GDA) Procurement Mechanism, the Government-to-Government Education Toolkit, the Development Credit Authority (DCA) Guarantee, and the use of Results-Based-Financing approach.

4. Monitoring and Evaluation Phase
The purpose of monitoring, evaluation, and learning is to apply knowledge gained from the evidence and analysis phase to improve program outcomes and ensure accountability for the resources used to achieve those outcomes. During this phase, you should look at the evidence and data from your program and determine whether your results are what you expected or not. It’s also a great opportunity to apply principles of learning and adapting.  The USAID Learning Lab CLA Toolkit provides resources on developing a learning agenda and M&E for learning.

If you decide to develop custom indicators, align them to existing United Nations, World Bank, Global Partnership for Education, and other multilateral and bilateral donor indicator frameworks. 

Ask yourself the following question: Are the program goals being fulfilled? As a manager, you need to know how much funding, apart from USAID investments, is going toward improving learning for all. Are these new investments or not? Look at public spending on education as a percentage of overall spending, which includes the private sector and funding from donors and multilateral organizations. 

USAID’s Evaluation Policy offers valuable insight on the purposes of evaluation, types of evaluations required and recommended, and the approach for conducting, disseminating, and using evaluations. 

Contact Education Finance expert Suezan Lee to learn more.