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The purpose of this paper is to analyse whether the development of a needs‐based funding formula for resource allocation incorporates the needs of funders or the needs of the service providers.

The paper analyses interview data and documentary evidence gathered from a UK local education authority about the creation of a “needs‐based” formula for sharing resources to schools. It employs and extends a framework developed by Levačić and Ross to evaluate needs‐based formula funding.

Although formula funding is purported to be a more objective method of resource allocation, the paper finds that as with other resource allocation methods the power relations between the funder and the service provider impacts on the extent to which service provider needs are incorporated into the funding formula.

This paper considers only the funding of schools. Further work is needed to investigate formula funding for other public services.

Debates between funders and service providers should be encouraged by policy makers to ensure that allocations based on the funding formula are acceptable to service providers.

The paper provides a useful analysis of a needs‐based funding formula for resource allocation in schools and whether this incorporates the needs of funders or the needs of the service providers.

The method by which the state allocates resources to its schooling system can serve as an important instrument for achieving desired improvements in levels of educational attainment, social equity and other social policy goals. In many school systems, the allocation of school resources is done according to a needs-based funding formula. The purpose of this paper is to provide a deeper understanding of some significant tradeoffs involved in employing needs-based funding formulae.

The paper is based on theoretical investigations of normative aspects involved in using needs-based funding formulae.

There are a number of underexplored complications and difficulties that arise from the use of needs-based funding formulae. Dealing with these involves significant tradeoffs that require taking normative decisions. Understanding these tradeoffs is important for improving the use of needs-based funding formulae.

The paper highlights three under-examined issues that emerge from the current use of needs-based funding formulae. These issues are: to what extent funding formulae should be responsive to social and economic needs? To what extent should funding formulae allow for the use of discretion in resource allocation? To what degree needs-based formulae funding should be linked to outcomes? By discussing these issues and the tradeoffs involved in them, the paper provides a deeper understanding of significant aspects stemming from the use of needs-based funding formulae. This, in turn, can serve as a basis for an improved and better informed process for decision making regarding the use of funding formulae.

Examines the construction of the funding formula, following the 1988 Education Act, used to determine the levels of devolved budgets in three English local education authorities (LEAs). Explains that, in each LEA, a team was formed to determine the funding formula. Also explains that, as most schools pre‐local management of schools (LMS) only kept aggregate records showing the cost of education at the levels of primary/secondary sectors rather than individual school level, the LMS teams faced serious problems in defining budget parameters, identifying cost elements and attributing costs to functions. More critically, points out that while the 1988 Education Act made it clear that the new budgeting system should be comprehensive in the sense of not merely reflecting past expenditure patterns but being based on perceived education needs, the LMS teams developed funding formulae which predominantly preserved the status quo established by historical expenditure patterns. Explores both the arguments and the mechanisms which each LMS team deployed in order to produce an incrementalist budgeting system and the constraints that operated on incrementalism.

Not much information is broadly shared about how current system and resource library funding formulas operate. Do the formulas encourage or discourage certain programs or services? How are systems and resource libraries funded across the country? These questions are vital to systems looking for fiscal models that work. Having examined the costs of basic services provided by the seven Colorado regional library service systems and the Colorado Resource Center (CRC) previously in the Bottom Line (Fall 1990, pp. 18–24), this second article reviews the current funding formulas for the systems and the CRC.

Resource allocation is a key policy instrument that affects the educational achievement distribution (EAD). The literature on methods of allocation is focused mainly on equity issues. The purpose of this paper is to develop a composite funding formula, which adds to the equity-based element (i.e. a needs-based element compensating for students’ low starting points), an element of rewarding improvement in schools’ educational achievement distribution (IEAD) (i.e. raising the overall level of achievement and narrowing the achievement gap).

This formula is developed using advanced regression models as well as integrating further policy considerations. The data sets are comprised of nation-wide student-level information on longitudinal students’ achievements (8th graders of 2006, and four years later 12th graders 2010), as well as student background characteristics, and teacher profiles and school features. The Israel data serve as an interesting case study for other countries which are similarly characterized by its students’ diversity, and by its aspiration to improve its EAD and to narrow the achievement gap.

Results reveal that the variance among students’ performance is mostly explained by their past performance. In addition, other background characteristics also contribute to the explained variation in students’ performance; however, a lower contribution was found, compared with that of the previous performance. Specifically, schools’ value added contributes 25 percent to the overall 50 percent of explained variance. In other words, allocating resources to schools solely with accordance to equity issues might have an adverse effect on improvement. Yet, designing a composite mechanism that integrates both equity and improvement issues might be more effective.

Policy makers in other countries that strive to achieve improvement as well as equity in education might consider adjusting the technique developed in this work. The proposed technique might be adjusted based on each country’s nation-wide student-level data. The design of a research-based funding formula aimed at improvement in education as well as considering equity issues might be more effective, equitable, and efficient.

The main contribution of this work is the conceptual development of IEAD, as well as its measured weight in the funding formula. This work suggests an innovative method of allocation that rewards schools by allocating larger resources based on the improvement gained in the process of learning (not just on the inputs or outputs/outcomes). This research value lays in its design of a composite funding formula that takes into account, in addition to the equity component, an innovative improvement-based component. In addition to that, the value of this research lays on its policy implications. This research suggests and develops a technique for developing a research-based funding formula that might be useful for other countries aspire to improve their education.

The purpose of this paper is to discuss how funding systems influence higher education institutions and their strategies and core tasks.

Taking the results of a comparative study between Denmark, Norway and Portugal as a point of departure, the paper identifies and analyses the main features of these state funding systems, their strengths and weaknesses, and their impact on academia.

The system‐level analysis offers an illustration of a trend across Europe. The paper shows that mixed funding models have been implemented in all three countries.

Funding systems and their impacts do not come in neat packages. The systems demonstrate a mixed pattern of strengths and weaknesses. The impacts of the funding systems converge, although different mechanisms are employed. There are no clear cut differences in the perceived strengths, weaknesses and impacts of the two main types of funding systems – input‐based funding and output‐based funding – presented and discussed in the paper.

This paper investigates whether an outcome-based school aid formula could improve fiscal and outcome equity significantly more than a typical aid formula would. When outcome-based formula is applied to foundation aid, fiscal and outcome equity deteriorates compared to Ohio's recent aid formula. However, when it is applied to power-equalizing aid, the latter improves fiscal and outcome equity more significantly than both foundation aid and Ohio's recent aid formula do. This paper further shows how to apply them to real-world cases. The lessons from this paper can be easily applied to similar grant systems with standardized test scores.

The international literature on the inclusion of pupils with special educational needs has been wide‐ranging, focusing mainly on curriculum and assessment, and social inclusion. The issue of funding has been mainly confined to discussions about the size of budget needed to support the resource needs of inclusion (e.g. the costs of additional teachers, support assistants or transport). Less attention has been given to the actual structure of the budget for special education. There has been greater interest in the strategic management of budgets and in the interaction of funding mechanisms at the national, local and institutional levels. This article discusses the effect of resourcing mechanisms for special education and draws on a study across Europe, and other studies based in The Netherlands, the USA and the UK. The strategic behaviours generated by different approaches are considered and the degree to which any particular strategy can influence the inclusion of pupils with special educational needs is assessed.

Increasingly, countries around the world are reforming their traditional ‘special educational needs’ funding models, many of which contradict the overarching principles of inclusive education as set out in the United Nations Convention on the Rights of Persons with a Disability (UNCRPD). There is growing awareness across countries that the way education systems are financed directly shapes the extent to which schools can be inclusive. Spiralling costs have also influenced governments who have begun calling for ‘cost control’ and greater transparency and accountability in how resources are distributed and monies are spent. In Ireland, calls for a more equitable resource model for students with disabilities in mainstream education resulted in the introduction of a new system of funding which removed the need for diagnosis to receive supports. However, since ratification of the UNCRPD in 2018, Ireland's system of special education is being considered for full reform with the possibility of moving to a system of inclusive education and the removal of special schools and classes. This raises the question: can two separate funding streams, one for general education and one for special education ever exist in an inclusive system? Having one funding model for all students, although the logical choice, is the source of much concern among parents and disability advocates, many of whom fear it will lead to children with disabilities ‘falling through the cracks’ and used by government as a mechanism to reduce spending overall.

The purpose of this paper is to explore the impact of information acquisition for the purpose of differentiating agencies operating in different localities on the design of optimal funding.

This paper is a theoretical study. The focus is on a situation in which agencies providing public services have perfect private information about their cost conditions before the government sets the formula for funding.

The authors show that, using a free signal correlated with costs of operation to differentiate agencies situated in different localities, the government can achieve better welfare for households across regions. However, when there exist non-negligible costs involved in the differentiating process, it may pay to acquire information only if the signal acquired is informative enough, i.e., the correlation between the signal and the agencies’ true cost conditions is strong enough.

This paper is of interest to academics and policy makers. Acquiring information for tagging can be viewed as a preliminary screening process. Different types are then endowed with distinctly different incentives to control the costs of operating their agencies. Specifically, when the observed cost signal and the true cost conditions of agencies are positively correlated, the government should optimally be more aggressive in distorting the high-cost type’s effort decision by giving less incentive for the low-cost type agencies to cut costs than in the no-differentiation case, and vice versa.

This paper is the first study that explores the impact of information acquisition on the design of optimal funding for public service agencies.