Assessment Of Public Education Expenditure Efficiency Across Lithuanian Municipalities

Efficiency of education expenditure is the ability to maximize the educational achievement giventhe resources invested. Although public education expenditure tends to increase, yet this doesnot necessarily guarantee high quality of education services. This study aims to assess publiceducation expenditure efficiency of Lithuanian municipalities and to identify the factors explaining its variations. The study used data for 2013-2019 from 60 Lithuanian municipalities. Corrected Ordinary Least Squares method was employed for public education expenditure efficiencyassessment and regression analysis was used to determine its influencing factors. Inputs included financial (public expenditure for education and maintenance) and nonfinancial (compositionof teachers, occupied area, etc.) variables. Passing ratio of Lithuanian (national) language andmath exams were used as efficiency outputs. The context variables represented environmentalfactors of educational achievements, such as number of business entities, users of social housing, libraries, and culture centres as well as municipalities’ overall financial autonomy. Results ofthe research are ambiguous. When assessed by the overall passing of the exams, the efficiencywas high, scoring 86-90%. But when evaluated by passing exams with the highest scores, it didnot even reach 40%. Two types of public expenditure were identified as the most influential factors - public expenditure for education with the negative trend, and municipality own financingwith the positive influence on the public education expenditure efficiency. Such results supportthe decentralization of public education expenditure management and call for alternative outputmeasures in the Lithuanian public education system.