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Education voucher system

The Chief Executive announced in his 2006 Policy Address that:
“We will provide fee assistance to parents of children aged three to six in the form of an “education voucher”… Starting from the 2007-08 school year, we will provide, in the form of vouchers to parents, an annual subsidy of up to $13,000 per student, of which at least $10,000 must be used on fee subsidy, with the remaining money spent on teacher training… By the 2011-12 school year, the annual subsidy per student will be $16,000 and will be used entirely for fee subsidy. Any local non-profit-making kindergartens that charge fees not more than $24,000 per student per annum will be eligible to redeem the “education voucher” according to their student intake. To assist parents to choose a kindergarten, all participating kindergartens will be required to provide information on their facilities and achievements, including the academic qualifications of the principals and teachers, the number of teachers and students, special features of their curriculum, and teaching arrangements. To assure teaching quality, they will also be subject to classroom inspection.”

There have been much discussions on the proposed education voucher system lately. However, I think most of them are politically motivated and miss the point completely. The LegCo Secretariat has conducted a research on education voucher system in 2002. We can still read the research paper in the LegCo website.

The education voucher system was the brainchild of Milton Friedman, whose goal was the improvement of the quality of education through market forces. He predicted that education vouchers would drive schools to respond to the needs and preferences of students with a view to improving student enrollment. Furthermore, parents would be free to choose among schools which best meet their needs. However, the implementation of this theory was not successful in many countries.

The underlying principle of Friedman’s theory is the introduction of market force into education. This is a very fundamental change to education, whose purpose is to educate, rather than the pursue of a business. Education was a lucrative business in the past, and only rich and important families could afford it. The quality demanded from teachers were very high. Nowadays, education is human right protected by Article 28 of the International Convention on the Rights of the Child. Education is now available to everyone, and as a result, it is a losing business mostly paid for or subsidized by the government, except for a few prestigious education institutions.

In Hong Kong, we have nine years free and compulsory education from primary to junior secondary schools. To achieve a higher level of human rights protection, the society always demands more. Senior secondary schools, post-secondary schools and universities are heavily subsidized with public funds… except nurseries and kindergartens. So it is worthy of applause when the government extends public fund subsidy to early childhood education.

The question is: why education voucher? To cater for nine years free education, the government has adopted the model of government-run or aided schools. Government provides the accommodation and pays all the expenses. For aided schools, the administration of the schools is given to school sponsoring bodies. These bodies are religious institutions, charitable institutions and many non-profit making social service institutions. They operate the school for the sake of education and at the same time for their own specific purposes, all at the expense of tax payers.

It is an interesting question why the government does not choose the age old model of subsidy to schools, but the new education voucher system which are not successful in many countries. The simple fact is that the education voucher system is the dream of the resource and system managers, not the educators. It occurs when one looks at education from the resource angle and wonders how best to use the money. The aided school system is notorious for the uncontrollable school sponsoring bodies who want to run the schools in their own way. Very often, this is contradictory to what the government wants, which are controlled curriculum, filled-up classes, a top-down education policy. The situation is aggravated by the decrease in student population in recent years, leading to unfilled places in primary as well as secondary schools. There are also sub-standard schools which the government can do very little to correct. All these schools are still receiving the same subsidy according to the staff establishment and the number of classes. This is not acceptable to education administrators, many of them are not educators. To make the money worth, there should a better way of resource allocation. An alternative to the present system of school aid is to change the method of allocation from school-based to student-based. Instead of subsidizing a school according to its infrastructure and staff establishment, the subsidy could vary with the size of output, i.e. number of students taught.

The education voucher system is such a system. Subsidy is allocated according to student enrollment, thus the illusion that the money goes to the students or parents. In fact it is not. Government only pays the nurseries and kindergartens. The subsidy is very flexible, not to the parents or kindergartens, but to the government. Irrespective of the actual school fees, government only pays up to the maximum amount. Under the proposed formula, government pays $13,000 to $16,000 a year against school fee of $24,000. It is not free education, yet. Furthermore, schools under the subsidy scheme are well controlled. There is a long list of items for compliance including non-profitable status, annual school fee not more than $24,000, providing information on their facilities, academic qualifications of the principals and teachers, the number of teachers and students, special features of their curriculum, and teaching arrangements. Most of all, they will be subject to classroom inspection. The freedom of nurseries and kindergartens will be gone. The power of the education administrators is enhanced.

The introduction of the education voucher system to early childhood education can be viewed as a pilot project of reform of education resource allocation. There have been attempts on such reform in primary and secondary schools. In the past, the government supplemented student places of free education by buying some places from private schools. The subsidy to these private schools is calculated by the number of student places accepted by the government as allocation to free education. In the last few years, the government has been promoting the direct subsidy scheme to schools. Aided schools joining the direct subsidy scheme will be allocated subsidy according to the actual number of students enrolled, instead of the fixed sum tied to staff and classes. It is clear to see that schools which could not fill all the student places would not receive the maximum subsidy. To provide the incentive for aided schools to change to direct subsidy scheme schools, government allows them to charge school fees (this is against the policy of free education), employ any number of teachers to suit their need and freely set the salaries, and freely design their own school curriculum. It is like trading government control for less subsidy. Money is everything, under the name of allowing the schools to excel and giving more choices to parents. This is a contradicting education policy where school curriculum is tightly controlled for some, but greatly relaxed for others. Parents may send their children to aided schools to enjoy free education while studying under a much criticized rigid curriculum, or pay for the education in private schools or direct subsidy scheme schools with a much better curriculum which inspires students more.

The education voucher system, Hong Kong style, could be a much better system. If it can be successfully implemented in nurseries and kindergartens, then it will be very tempting to introduce the system to primary and secondary education. This will bring the education expenditure under better control, create a market among primary and secondary schools, bring in competition thus improvement in quality, while at the same time maintain government control on education by imposing criteria for entry of schools into the system. It will be difficult as many school sponsoring bodies have vested interest in the present aiding system. At present, the most useful tactic of the government is the closure of schools which have insufficient primary one or secondary one student intake against changing over to direct subsidy scheme. The education voucher system, or at least a partial introduction, may speed up the reform. We just need powerful and determined education administrators at the top.

One Comment

  • Posted February 26, 2007 at 3:50 am | Permalink

    If you had to argue against the motion that “The voucher system should be extended to include the private kindergartens.”, what would your arguments be?