Enriching Public Private Partnership

in Education

Francisco M. Varela

Undersecretary for Finance and Administration

August 30, 2012

The State and Private Schools

• The State as regulator and promoter

• The State as client

Rationale /Considerations for PPP

• Expands access to basic education,

especially in areas not reached by the public

school system

• Promotes the provision of quality basic

education

• Offers cost effective solution for government

• Must cater to target clientele of government

Public Private Partnership for School

Infrastructure Project • Build-lease-transfer contract for the design,

construction, and maintenance of 9,300 classrooms with toilets and furniture in Regions I, III and IV-A for a period of 10 years

• Distinct features: – Bidding in large scale regional portfolios vs. single,

separate projects under regular procurement

– Open to new technology vs. use of conventional technology only

– Payment terms stretched over a period of 10 years vs. payment upfront

Elementary Enrollment Trends

(8-10% Private)

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Public 11,983,554 12,083,661 12,304,207 12,562,272 12,788,197 13,005,459

Private 1,015,961 1,048,554 1,092,781 1,112,137 1,134,222 1,146,921

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

Public Private

Secondary Enrollment Trends

(20% Private)

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Public 4,978,435 5,026,823 5,126,459 5,378,756 5,415,498 5,530,370

Private 1,285,035 1,290,792 1,332,846 1,342,296 1,340,103 1,374,710

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Public Private

Elementary and Secondary Enrolment Trends

(Public vs. Private)

12.9 13.3 13.9 14.2 14.80 15.4 15.6 15.9 16.4 16.8 17.1 17.1 17.0 17.1 17.4 17.9 18.2

2.32 2.33 2.37 2.33 2.34 2.29 2.20 2.17 2.22 2.21 2.23 2.31 2.30 2.34 2.43 2.45 2.50

-

5,000

10,000

15,000

20,000

25,000

Public Private

Ave 1993-97 Public: 85.6% Private: 14.4%

Ave 1998-2003 Public: 87.9% Private: 12.1%

Ave 2004-09 Public: 88.0% Private: 12.0%

7

Public Private Partnership

• Relationship where government contracts out to private providers the supply of a particular service of a defined quantity and quality at an agreed price for a specific period of time.

• Win-win arrangement: – Private sector: maximizes the use of its skills,

resources and capacities to deliver services in a more efficient manner; generates new business

– Government: enables public sector to focus on delivering other critical functions and services; promotes certainty and predictability in spending

Education Service Contracting

• Largest and longest-running example of PPP in Philippine education: government provides a fixed annual subsidy for students who wish to pursue secondary education in certified private schools.

– Non-NCR: PhP6,500 starting Gr.7 of SY 2012-2013

– NCR: PhP10,000

• Aim: democratize and improve access to secondary education, reduce class size in crowded public secondary schools

Opportunities for PPP Expansion

• GASTPE / ESC Expansion

• K-12 Senior High School PPP Schemes

The number of ESC grantees has increased

by 40% since School Year 1996-1997.

210.63 209.12 212.50 238.09

264.43 274.01 277.93 278.09

316.86

384.19

429.48

477.11 509.06

536.91

598.88

637.79

724.06

-

100.00

200.00

300.00

400.00

500.00

600.00

700.00

800.00

1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

Number of ESC Grantees from SY 1996-1997 to SY 2012-2013 in thousands

Source: Fund for Assistance to Private Education, 2012.

The number of ESC participating schools

has doubled in the last decade.

1,538 1,533 1,518 1,677

1,843 1,949

2,566 2,737

2,813 2,901 2,879 2,881

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

Growth in Number of Participating Schools

Source: Fund for Assistance to Private Education, 2012.

Funding for the ESC program has increased

progressively.

674 689 691

1,228

1,515 1,718

2,386 2,568

2,737

3,087

3,626

4,271

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

ESC Budget from SY 2001-2002 to SY 2012-2013

Source: Fund for Assistance to Private Education, 2012.

2013 GASTPE Budget

• Php 7.0 billion in 2013 vs. Php 6.3 billion in 2012.

• 2013 budget sufficient for 1 million grantees.

Issues in the Expansion of GASTPE

• Demand vs. Supply Issues

• Distribution Among Schools

• Appropriate Grantee Selection Process

• Will it Increase Enrollment in Private Schools?

Government Objectives in Expanding GASTPE

• Decongest public schools

• Minimize cost of expanding education services

• Improve quality of education for beneficiaries

• Improve quality of education for non-beneficiaries by improving conditions in the public schools.

Wrong Grantee Selection Will Not Help Private Schools

• Inappropriate grantees are those students who would have enrolled in a private school, even without government subsidy.

• If subsidy is given to these students, the enrollment in private schools will not increase.

• The revenue to the school will remain the same. Govt. subsidy will be enjoyed by private households.

Win – win Solution

Proper Grantee Selection Additional Enrollment

for Private Schools

Decongest Public Schools

Increased Revenues for

Private Schools

Critical Factors for Success

• Quality Advantage of Private Schools

• Appropriate Amount of Grant

– Calibrated to target households belonging to certain income groups.

Secondary Average NAT Scores, Private

Schools

49.12

51.17

41.17

37.04

51.71

50.26

46.47

0.00 10.00 20.00 30.00 40.00 50.00 60.00

Filipino

Araling Panlipunan

Mathematics

Science

English

Critical Thinking

Over-all

NAT Year 4, SY 2011-2012

Source: National Education Testing and Research Center, Department of Education, 2012.

Elementary Average NAT Scores, Private

Schools

61.00

46.64

58.90

55.47

48.43

54.09

0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00

Filipino

Math

English

Science

HEKASI

Overall

NAT Gr.6, SY 2011-2012

Source: National Education Testing and Research Center, Department of Education, 2012.

Challenge for 2013 and Beyond: Will We See a 20% Increase in the

Enrollment of Private Schools?

PPP Opportunity: K-12 Senior High School

Senior High School Budget Estimates – Low

Enrolment Growth Scenario

39.5

51.7

33.6 35.2 36.1 1.10

2.07 2.13 2.16 2.16

0.00

0.50

1.00

1.50

2.00

2.50

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2016 2017 2018 2019 2020

Gro

wth

Rat

e in

En

rolm

en

t (i

n m

illio

ns)

Bu

dge

t (i

n b

illio

ns)

Source: Medium-Term Spending Plan 2012-2017 (April 14, 2012).

Senior High School Budget Estimates – High Enrolment Growth Scenario

Source: Medium-Term Spending Plan 2012-2017 (April 14, 2012).

41.3

56.6

40.5 44.4

48.3

1.15

2.24 2.42

2.58 2.73

0.00

0.50

1.00

1.50

2.00

2.50

3.00

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2016 2017 2018 2019 2020

Gro

wth

Rat

e in

En

rolm

en

t (i

n m

illio

ns)

Bu

dge

t (i

n b

illio

ns)

PPP Objectives

• Minimize the burden for expanding the public schools.

• Provide opportunity for HEI’s to make use of available capacity that would be underutilized as a result of the loss of college students during the transition years.

• Provide opportunities for other private schools to expand programs and increase enrollment.

• Allow for greater diversity in program offerings, particularly in the context of the varied curriculum tracks for senior high school.

PPPs and the K to 12 Reform

• Senior High School Program

– Projected enrolment: 1.1 million by 2016 • Projected participants in a PPP arrangement: 300-400,000

students

– Offer Senior High School license: enables not only private secondary schools but also private higher education institutions to participate • Some public Junior High Schools will expand to offer

Senior High School

• Some public Junior High Schools will become stand alone Junior High Schools

• Some public Junior High Schools will be developed into stand alone Senior High Schools

Issues to be Resolved

• Which schools can participate? How will they be selected?

• Which students would be entitled to benefit from the program? Among those who will enroll in private senior high schools, who among them will receive government support?

• How will the students be divided between those who will remain in the public schools and those who will be encouraged to go to the public schools?

• What price will we set for these arrangements? Will this price be the same for all or will it vary depending on the place, type of school, and income background of the beneficiary?

• What will happen to the current GASTPE program?

• How do we ensure that the participating private schools deliver high quality programs?

Critical consideration: Expected beneficiaries will come from different income backgrounds, when compared

to existing GASTPE beneficiaries

Possible PPP Schemes

• Continuation and Expansion of Current GASTPE ESC program.

• Voucher System

– Variant: tiered vouchers

• Individualized contracts with schools, where government provides lump sum capital and operating funds, and schools commit to deliver certain enrollment and quality targets.

Tiered Voucher System

Advantages

• Simplifies grantee selection. Everyone receives a voucher.

• Avoids individual negotiations with schools.

• Avoids problem of allocating resources among school participants.

• Quality monitoring, while still needed, would be aided by the free exercise of market choice by students and their families.

Disadvantages

• Administrative complexity of setting the tiered amounts and determining who receives how much.

• Policing the selling and transfer of vouchers.

• Policing the use of unutilized vouchers.

Success in the implementation of PPP for Senior High School could broaden the horizon for PPP in

education in the Philippines, and could lead to further expansion and the adoption of new modes for the private sector to get involved in the delivery

of public services

Thank You

Region 1

Region 2

Region 3

Region 4A

Region 4B

Region 5

Region 6

Region 7

Region 8

Region 9

Region 10

Region 11

Region 12

Region 13

NCR CAR ARM

M

SY 2011-2012 49,695 35,598 70,745 72,978 21,707 37,907 58,794 45,915 27,655 18,023 32,706 30,760 43,756 19,151 26,203 24,840 21,361

SY 2012-2013 53,140 37,255 87,822 88,039 24,082 42,650 59,252 56,584 28,405 19,924 37,085 34,727 46,283 20,312 37,845 25,878 24,776

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Table 2: Regional Distribution of ESC Grantees SY 2011-2012 vs SY 2012-2013

SY 2011-2012 SY 2012-2013

190,536

178,195

144,894

123,880

250,761

173,131 163,495

136,672

-

50,000

100,000

150,000

200,000

250,000

300,000

First Year Second Year Third Year Fourth Year

Table 3: ESC Enrollment by Year Level SY 2011-2012 to SY 2012-2013

SY 2011-2012 SY 2012-2013

194

111

338

435

84

140

214 193

99

71

173

146 149

79

315

77 61

0

50

100

150

200

250

300

350

400

450

500

Table 6: Number of ESC Participating Schools by Region SY 2011-2012

305.88

209.19

507.51 516.59

137.20

243.90

330.10 318.48

161.03

106.31

213.76 198.30

254.19

116.97

368.55

147.54

120.25

0.00

100.00

200.00

300.00

400.00

500.00

600.00

Table 8: ESC Budget by Region SY 2012-2013 (in thousand Pesos)

10.59 9.80

13.29

17.26

9.65 9.18

13.78

11.27

9.36

11.18 9.28

12.90

9.81

8.53

26.98

10.48

8.37

11.41 10.57

14.17

17.91

10.70 9.99

15.13

11.53

9.85

11.57

9.98

13.46

10.45 9.31

27.45

11.35

8.82

0

5

10

15

20

25

30 R

egio

n 1

Regio

n 2

Regio

n 3

Regio

n 4

A

Regio

n 4

B

Regio

n 5

Regio

n 6

Regio

n 7

Regio

n 8

Regio

n 9

Regio

n 1

0

Regio

n 1

1

Regio

n 1

2

Regio

n 1

3

NC

R

CA

R

AR

MM

Th

ou

san

ds

Table 9: Average Private Secondary School Tuition Fees

SY 2010-2011 to SY 2011-2012

2010-2011 2011-2012

64,069

90,142

108,769

128,215

91,712

59,914

35,370

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

Table 10: Number of EVS Grantees from SY 2006-2007 to SY 2012-2013

Region 1

Region 2

Region 3

Region 4A

Region 4B

Region 5

Region 6

Region 7

Region 8

Region 9

Region 10

Region 11

Region 12

Region 13

NCR CAR ARM

M

SY 2011-2012 1,60 1,83 8,19 8,83 1,65 2,62 1,00 3,68 1,55 1,00 1,98 2,11 2,12 1,08 15,8 576 4,14

SY 2012-2013 1,037 751 5,128 5,895 1,010 1,447 514 2,336 534 477 1,043 1,016 1,138 615 8,949 343 3,137

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Table 12: EVS Enrollment by Region SY 2011-2012 to SY 2012-2013

SY 2011-2012 SY 2012-2013

1.94

1.03

3.14 3.20

0.60

1.13

2.24

1.73

0.61 0.51

1.23 1.37

1.04

0.44

2.26

0.94

0.36

0

1

1

2

2

3

3

4 R

eg

ion

1

Re

gio

n 2

Re

gio

n 3

Re

gio

n 4

A

Re

gio

n 4

B

Re

gio

n 5

Re

gio

n 6

Re

gio

n 7

Re

gio

n 8

Re

gio

n 9

Re

gio

n 1

0

Re

gio

n 1

1

Re

gio

n 1

2

Re

gio

n 1

3

NC

R

CA

R

AR

MM

Th

ou

sa

nd

s

Table 16: Teacher Salary Recipients SY 2011-2012