Educational finance and educational reform in Peru

Abstract

In keeping with the format of other country studies in this series, this study examines the major forces which have affected the costs of educational development in the past decade in Peru, and those forces which are likely to affect its finance in the future until 1980. Although much of Peru's performance is unique to its own national experience, its pattern of rapid educational expansion has been repeated in the majority of developing countries in recent times. Enrolments at every schooling level, and enrolment rates for school-age populations, rates for literacy and for the 'catching-up' of schooling for young and older adults have advanced rapidly, and the increases in university, post-secondary and vocational schooling have also been dramatic. Education in the developing countries is undertaken today at a scale and rate of increase which increasingly places its requirements close to the financial capabilities of the economic system upon which it must depend for public financial support. The objectives of this study are divided into several major parts which are the respective subjects of the chapters which follow. It is hoped the parts come together in an attempted answer to what the likely relationship will be between Peruvian educational goals and economic possibilities in the period to the end of the decade. First, in Chapter II, we review by a descriptive and historical analysis of the past decade the recent accomplishments of enrolment, degree of education in the population, the teaching force, and the patterns of performance as analysed in more detail by the range of schooling levels from pre-school education to university and vocational education. We also describe past expenditure-cost trends which lead to an analysis of unit (per pupil) costs and the major contributing cost variables such as teacher salary policy. Peru's is a timely and interesting case because of its widely heralded and widely watched attempt at a national comprehensive educational reform. The reform, begun in 1971/72, is intended eventually to transform the entire educational system including the goals and methods of schooling and the popular attitudes toward the place of education in society. The reform targetSj set for 1980, imply a fast pace of change as well as change of far-reaching scope and content. The qualitative features of reform are to coincide with the last phase, already under way, of the move toward universal primary schooling and adult literacy. The reform involves a strong reorientation of all levels of schooling toward vocational and professional training and technical studies which lead to worker capability. Its new methods are to be embodied in a system of nuclearization, a new and Peruvian form of local organization and administration of groups of schools. The new features of the reform are the topic of Chapter III. In order to match education with the economy, we move in Chapter IV to a discussion of the Peruvian economy in the past decade. We examine the performance of the major sectors, including the special problems of agriculture and mining, the areas of recent strong performance, and as well, the areas of persistent difficulty. The impact of international trade and international capital movements is seen to be important. Noting the good general performance of the economy over the decade, we also note the fluctuations in performance over time, the period of high growth which ended in financial crisis and relative recession toward the end of the sixties. The extent to which the educational system is sensitive to economic performance becomes more apparent in noting these time trends. One purpose of this historical and descriptive section is to prepare the groundwork for projecting future economic performance in Chapter V. Our economic projections of Chapter VI do not offer a prediction of what will necessarily happen by 1980. They test the reasonableness of assuming two possible growth rates for the economy, a 'minimum' and a 'maximum', from which can then be derived rates at which funds for public expenditure would be presumed to grow, the potential source for educational finance. Such an exercise shows reasonable constraints. It puts a type of 'burden of proof on projections which imply funds available at a much higher rate. It asks more forcefully what sectors could grow more than posited, what greater sources of capital formation could reasonably be expected, what further relief from balance of payments and foreign borrowing constraints could be achieved, or what combination of these could be achieved in order to accept higher rates than we have tested for a ten-year projection period. Extremely high economic growth could take place under ideal conditions. But the analysis leads from what seems likely. From the projection of the economy we derive two possible rates of increase of funds for all public expenditures. This establishes a setting within which educational spending from public funds can grow beyond that inherent in economic growth only if (i) education will grow further as a proportion of public expenditure, or (ii) public expenditures will grow relative to GDP (Gross Domestic Product), or (iii) the economic growth itself will have to exceed our estimates. Thus the analysis of economic and public funds capacity, couched in terms of probable 'permissible' rates of growth of educational expenditure, is to be compared to our later projections of the educational system and its reform. In Chapter VI we attempt a projection of educational costs to 1980. Our basis for the projections is a test of the enrolment goals of the Education Plan of 1971-75 which also spells out the long-range target of full implementation of reform and enrolment goals to 1980. The analysis is undertaken in two stages of partial analysis, one with and one without, the assumptions of the reform. In each case the form of the projections is the same, a statement of the average annual future growth rate of public expenditures using 1970 figures as a base. The first mode of analysis involves a series of projections testing different hypotheses of change in teacher salary and material costs using historical unit costs as a base, what we have called 'aggregative' projections. These largely reflect the impact of these cost hypotheses given official plan enrolment projections. The second mode of analysis deals directly with reform. What are those features of the reform which seem most likely to affect unit costs; what i s the possible order of magnitude of those changes which can be given an estimate? Some features of the reform may bring cost gains and we have tried to identify these as well. The goal in this section is to assess the cost impact of qualitative educational change, at least in a rough way. The two parts of the analysis can then be brought together. One part represents the burden on future expenditures which will be derived from enrolment assumptions and salary and other aggregative policies; and the other part will be derived from features of educational change and reorganization. Adding the effects on costs, our final conclusion suggests future stress between educational goals as stated and the capabilities of the economy and the public revenues it can be expected to generate. Thus the question that i s raised in this study as in many of the others in the series is whether Peru will continue to face, perhaps with increased intensity, the question of whether ambitious educational goals can be made consistent and compatible with probable economic growth. The past relatively impressive growth of the economy and the history of substantial quantitative educational expansion at least provide grounds for optimism that future growth and improvement on a considerable scale can continue. But the question is raised whether there is not also evidence that further priorities may have to be set and further choices made if the costs of expansion and of reform are to prove in excess of resource availability.