Educational expenses seem to be the most significant feature in the budgets of all countries. However, it is regrettable that education is not seen to be contributing to development the way it is expected to, especially, in developing countries (Psacharopoulos et., al 1986). Psacharopoulos et al. (1986), attribute the inability of education to contribute to development to four major reasons; under-investment in education, misallocation of educational resources, inefficient use of resources and inequality in the distribution of educational costs and benefits among various income groups. A careful review of all the four reasons shows that they all have to do with financing of education. Indeed, there are also other non-financial factors that contribute to the failure of education systems.
According to Uyttersprot (2008), the effective and efficient financing of education has been hampered by many factors. This problem has even been compounded by the fact that demand for education keeps on rising as a result of more and more countries and people realising the important role education plays in the life of an individual and in national development (UNESCO, 2002). UNESCO (2002) further attributes the increasing demand in education to population growth and higher rates of primary school completion. Increase in demand calls for expansion of education with its associated cost, which is dependent on fiscal resources but constrained by limited budgetary allocation due to competition with other equally important sectors for the limited available resources. The major debate is about who takes the responsibility of financing education and also, how educational resources could be best utilised to achieve educational goals. Countries therefore have adopted different systems of financing as well as strategies of funding education.
The major issues on how to and who should finance secondary education have been of particular concern to all. While the system of financing secondary education addresses the
issue on how to finance education, the various sources of funds for education address the issue of who should finance education.
A good education financing system generates an adequate level of funding while promoting efficiency and equity aimed at optimising the distribution of education quality and its benefits among the members of society. Adequate levels of expenditure lead, all other things being equal, to optimum educational outputs and outcomes, while allowing for a balanced pursuit of other, competing social goals (Saavedra, 2002, p.1).
This means that a system of financing secondary education does not simply look for funds to provide education but also, how the funds could be used optimally to achieve educational goals. Therefore deciding on the appropriate sources of funds and implementing effective and efficient mechanisms for the utilisation of the funds could help achieve value for money. For the experts, emphasis should be on how countries can balance the financing approach between more funding and more efficient use of funding.
The argument about who should finance secondary education is actually centred on whether individuals or households should be made to contribute financially to the education of their wards, or whether the government alone should bear the responsibility of funding education.
While there have been different opinions on who should finance education the compelling ones seem to be those arguing on the basis of who benefits from education. On this, Psacharopoulos et al. (1986) suggest a background analysis that will help produce efficient and equitable financing arrangements. The analyses should compare the socio-economic profiles of the general population and those enrolled at different levels of education and in different types of education. The underlying conclusion of this argument is that the cost of education should be borne proportionally on the basis of benefit derived by the individual, household and government. It is therefore argued that the benefits from basic education is more nationalistic than individualistic and this tends to be opposite as the level of education progresses higher. Hence, governments are called upon to bear the cost of basic education and individuals made to contribute to their higher education.
The debate on who should finance education can also be seen from the public good or private good perspective. Graves (2009) defined public goods as goods which must be supplied communally because; they cannot be withheld from one individual without withholding them from all. Thus, if education is seen as a public good, then, the cost of education must be borne by the government but it should be borne by the individual if it is perceived as a private good. Whether a private or public good, it is quite obvious that the benefits of education are to the individual, society and the nation as a whole.
The equity and externality arguments seem to support government or state funding of education. The externality argument recognises the benefits of education accruing to the society more than the individual by helping to disseminate social values and also forge national unity (Tilak, 2009).
It is obvious that education benefits both the individual and the society. It has also become clear that governments alone cannot bear the responsibility of funding education. At the same time, it is apparent that many individuals, especially the poor and marginalised in society, cannot bear the cost of their education. It is as a result of this that resources from other sources are welcomed into the education sector. It is for this reason that Moran (2012) proposed cost sharing.
In summary, an efficient secondary education financing system should generate an adequate level of funding while promoting efficiency and equity aimed at augmenting the distribution of quality secondary education for the individual and the society.