The landmark Right to Education (RTE) act will soon celebrate its fifth anniversary. Of its many important provisions, section 12(1)(c) has probably attracted the most limelight. It states that at least 25% seats in entry level classes in non-minority private unaided schools should be reserved for children from weaker sections, to be defined by respective state governments. The state governments are required to reimburse these schools. Reimbursement amount per admitted student is mandated to be the lower of actual amount charged from children by the school, or per student recurring expenditure incurred by the state in government schools (details below).

This article focuses on issues around methodology adopted by state governments (or lack of it) to calculate recurring costs.

As per the RTE, there should be one teacher for 30 students in the primary sections. From this, one can easily compute per student average salary expenditure as ‘recommended’ by RTE.

Who will undertake the calculation?

There is lack of clarity on who will calculate per child recurring expenditure incurred by respective states. Of 28 states whose rules and notifications were examined, only 12 states have stated an intent to set up a committee to assess per child expenditure. Rules and notifications of the rest of the states are silent on this issue.

What about the methodology?

None of the states specify the methodology for determining per child recurring costs, and what items of expenditure or budget heads would constitute ‘recurring expenditure’. This has implied confusion at the ground level as to who is supposed to pay for textbooks, uniforms, teaching material and mid-day meal to children admitted through section 12(1)(C). And the end result, in most instances, has been the parents paying out-of-pocket to buy these items either from schools or from market.

Are Cost calculations correct?

Since methodology of cost calculation is not defined, a natural question to ask is: are the amounts declared by the government ‘correct’? Ideally, per student recurring cost declared by the state governments should cover all recurring items of expenditure such as teacher and non-teacher salaries, running expenses on administration, entitlements to students (textbooks, uniforms etc.) and so on. But example of Rajasthan in the table below shows that it may not always be the case.

The way forward

Get the methodology right, and in public domain

State governments should form a committee of experts in public finance and education administration with members drawn from inside and outside the current administrative set-up. The committee should develop a robust methodology for cost calculation. The methodology, along with the data required, should be put in public domain so that there is clarity on which expenditure will get reimbursed, and the calculations can be replicated. Methodology being in public domain will also allow drawbacks to be highlighted, and hopefully corrected.

Reimbursement based on norm instead of actual expenditure

Per student recurring cost is the total recurring cost incurred in government schools divided by the number of students enrolled in government schools. Increase in the numerator and/or decrease in the denominator will push these costs up, and that’s the reality of many states. Consider Rajasthan, for example, where absolute enrollment in government schools has declined from close to 70 lakh in 2010-11 to 64 lakh in 2013-14, while the number of teachers has continued to increase, from 2.71 lakh in 2010-11 to 3.26 lakh in 2013-14. On the other hand, per student declared reimbursement amount has increased- from Rs. 9748 in 2012-13 to 14,034 in 2014-15, a whopping 45% increase in three years. Additionally, data on actual expenditure is available with a considerable lag. Actual expenditure is contingent on fiscal health of the states and its administrative capacity.

Given the possibilities of wide fluctuations in actual expenditure, norm-based per child reimbursement seems more desirable. To explain, the state governments can easily compute average salary expenditure per teacher. As per the RTE, there should be one teacher for 30 students in the primary sections. From this, one can easily compute per student average salary expenditure as ‘recommended’ by RTE. In 2013-14, as per government’s own data, there is one teacher for slightly less than 30 students. Further, unit costs have already been specified for various entitlements such as mid-day meal, uniforms, textbooks etc, either at the state or central level. Adding these up, gives us ‘norm-based’ reimbursement.

These measures, along with a transparent and objective system of admissions which doesn’t allow schools to ‘cherry-pick’ students, and give parents freedom to choose schools, ensuring that the students admitted through section 12(1)(C) receive quality education without discrimination, providing academic and ‘non-academic’ support to these students and their parents, and streamlining reimbursements will go a long way in successful implementation of section 12(1)(C).

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This is adapted from chapter 4 in the recently released report, State of the Nation: Section 12(1)(c), a collaboration between Indian Institute of Management- Ahmedabad, Central Square Foundation, Accountability Initiative (Centre for Policy Research) and Vidhi Centre for Legal Policy.