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Strategies In The Fiscal Reform Of Estonian General Education


  • Peter Friedrich
  • Janno Reiljan


In order to develop the necessary Estonian measures and policies the prevailing distribution of expenditures for these purposes are presented. Although the share of GDP used for financing education in Estonia is somewhat above the EU average the nominal amount of per capita education funds is comparatively low due to a low level of economic development. Moreover, because of thin population per square km many small schools exist in Estonia without a sufficient number of pupils, which makes the education system more costly. We consider two different basic strategies to improve the situation. The first strategy is an extension of a reform approach that was performed since January 2008 that refers mainly to the prevailing educational and spatial organization. We discuss the consequences and regional impacts of that policy. Criteria for a SWOT-analysis such as expenditure distribution, preserving regionally clear investment criteria, source of investment, etc. are used. The first strategy refers to improvements into the current system of financing schools that shows a state investment program for schools that considers the number of pupils per school and special educational needs. However, the performance of this policy is not based on a fair equal treatment of cases. Therefore a second strategy of improvement is discussed. It is based on the idea of Functional Overlapping Competitive Jurisdictions (FOCJ). The municipalities form FOCJ that are operating schools. In this way municipalities may form a school jurisdiction that can negotiate with central government institutions for the loan and the school equipment etc. A municipality can act individually or the FOCJ negotiates for the municipal members in total. Theories of FOCJ-establishment, FOCJ-contribution determination and FOCJ-negotiations with central government are demonstrated. The FOCJ can supplement positively the first strategy of reform.

Suggested Citation

  • Peter Friedrich & Janno Reiljan, 2010. "Strategies In The Fiscal Reform Of Estonian General Education," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 73, Faculty of Economics and Business Administration, University of Tartu (Estonia).
  • Handle: RePEc:mtk:febawb:73

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    Cited by:

    1. Hazans, Mihails, 2010. "Teacher Pay, Class Size and Local Governments: Evidence from the Latvian Reform," IZA Discussion Papers 5291, Institute for the Study of Labor (IZA).
    2. Peter Friedrich & Chang Woon Nam & Janno Reiljan, 2009. "Local Fiscal Equalization in Estonia: Is a Reform Necessary?," CESifo Working Paper Series 2800, CESifo Group Munich.

    More about this item


    funding of education; central government budget policy; local governments finance;

    JEL classification:

    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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