Share of Education’s Capital Budget Has Sharply Declined

Iran Open Data, an innovation project for collecting Iran-related data in one place and presenting it in easily accessible formats. Radio Farda, in cooperation with this institution, publishes a series of articles.

The right to free education, at least until the end of secondary school, is recognized in Iran’s constitution as it is in many other countries in the world.

A right that itself entails a heavy responsibility for the government in maintaining the quantity and quality of public and free education in Iran. Examining education’s share of the state budget and Iran’s economy can show what trend government spending and investments in education have followed. From this perspective, in this note we have examined the developments of the education budget in Iran between 2008 and 2016, broken down into current and capital budgets. A review that shows that although education’s share of the general budget increased during this period, the composition of education sector expenses has shifted more toward current expenses and the share of capital and educational investment budgets has decreased.

Education’s Share of the General Budget

Educational affairs in Iran’s state budget in 2016 were close to 51 trillion tomans, accounting for approximately 15 percent of the country’s general budget. In 2008, however, the total education budget was close to 12 trillion tomans, representing approximately 13 percent of the general budget. Examination of this time period shows that education’s share of the general budget between 2010 and 2013 followed a volatile trend and after 2013 showed an upward trend.

Chart 2 below, by simultaneously showing the trends of inflation rate changes and education budget growth rate, indicates that in most of the years examined in this note, the budget growth rate was lower than the annual inflation rate. This could mean a reduction in purchasing power for educational supplies, equipment, and teaching aids in schools as well as a reduction in budgets for building new schools and school renovations. A trend that appears to have reversed since 2015 and the education budget growth rate has exceeded the inflation rate. The continuation of this trend could lead to compensating for the setbacks caused by inflation in the years before 2015.

It is also crucial to note that all these figures are calculated based on 100 percent realization of the figures stated in budget laws. The reason for this assumption is the lack of published data on budget realization broken down by various departments. However, we know that approximately in these years the realization rate of the current budget was around 85 percent and the realization rate of the capital budget was less than 60 percent, which means the per capita education budget could be even lower than the amount calculated based on budget laws.

Important Changes in the Composition of the Education Budget

The budget for educational affairs in budget laws is calculated and allocated under two headings: current expenses and capital expenses. Current expenses include items such as salaries and wages paid to teachers, professors and employees, daily operational costs of organizations, schools and universities, as well as costs for procuring supplies and consumables.

The share of these current expenses from the announced education budget in Iran has always been much higher than the capital budget, and more interestingly, this share has increased rapidly from less than 82 percent in 2008 to more than 93 percent in 2016. On the other hand, the share of the education sector’s capital budget, which includes items such as school renovation and construction, procurement of durable educational supplies and modernization of educational tools, has decreased from 18 percent in 2008 to less than 7 percent in 2016.

A sharp decline that, if considered alongside the perpetually incomplete realization of capital budgets, shows that the pressure on education budgets in Iran has entirely shifted to the capital budget. The share of educational investment (capital budget) in Iran’s government education budget has severely decreased while a look at the news and statements of Iranian officials shows this cannot be due to the educational system’s lesser need for investment. Rather, it shows that educational investments, which are necessary to maintain the quality and quantity of education in Iran, have become victims of the increasing burden of current expenses in Iran’s educational system.

Conclusion

Budget statistics between 2008 and 2016 indicate growth in education’s share of Iran’s general budget. However, the notable point relates to the composition of the education budget, which has changed more in favor of current expenses during this time period. In such a way that in these years the share of the capital budget (investment) of the total education sector budget has sharply decreased, and governments have been unable to find a solution to compensate for this situation. This trend could be a warning of declining software quality and increased hardware vulnerability of Iran’s educational system in the coming years.

Source: Radio Farda