School Non-Salary Budget

The Government of Punjab is committed to providing adequate non-salary recurrent allocations to schools as part of its effort to improve school quality and performance. In order to achieve this, PMIU-PESRP has developed a Need-Based Non-Salary School-Specific Budgeting Formula for nine selected districts of Punjab (one district from each division) for the financial year 2013-14. The Formula is based on the international best practices and applicable to Punjab milieu, after careful field study and discussions with various stakeholders. The Formula works by allocating weights to different school types, number of students and several other relevant factors.

Under the old mechanism of financing, the Non-salary budget component has been calculated through incremental methods and based on bargaining. Historically, the allocation of budget has been very low and unpredictable. The execution of budget was very irregular and discretionary. The outcome was that merely 3% of total budget has been allocated to non salary component over the years, which is a lot less than globally accepted standard of allocating 15%-25% non salary budget component.

Under the new financing mechanism, the Non-salary budget component ceiling is fixed at 15%. Budgeting under the NSB is progressive and formula based linked with student enrolment. The new NSB formula is need based therefore the allocation of funds will be very predictable and consistent. Decentralisation of the administrative and financial management powers to the schools ensures that the execution of budget will be school based and involves a great deal of participation by the Schools Councils. The school administrations are expected to utilize these funds for providing functional facilities, fixed school expenditures, basic student entitlements and teacher and student furniture needs. This formula based funding is aimed to equip schools with the ability to manage their resources based on their specific needs. At the same time, it can give the provincial/district governments tools with which they can structure finance rules and accountability mechanisms for managing incentives.

Based on the agreed NSB funding formula, Government of Punjab has approved Rs. 3.5 billion as a block allocation of Non-Salary Budget (NSB) of schools in nine pilot districts(one from each division of Punjab), in the budgetary provisions of PMIU-PESRP or Financial Year 2013-14. Rs. 3,400 million has been allocated in nine pilot districts For the FY2013-14 under NSB. Funding mechanism as compared to the Rs. 1,015.28 million for FY 2011-12 under the old method.

Sr.No Districts Entitlement for FY 2011-12 (Provincial+District) (Rs. Millions) NSB Entitlement FY 2013-14 (Rs. Millions)
1 CHAKWAL 91.05 231.01
2 CHINIOT 77.33 190.51
3 KHANEWAL 78.14 408.43
4 MUZAFFARGARH 137.97 451.19
5 NANKANA SAHIB 68.35 170.65
6 OKARA 89.92 396.80
7 RAHIMYAR KHAN 261.45 550.87
8 SARGODHA 128.49 511.86
9 SIALKOT 82.58 488.67
  Total 1,015.28 3,400.00

The allocation of funds will be tied with two sets of deliverables i.e. short-term and long- term. The short-term targets will be due at the end of first year. The short-term targets are; Cleanliness 100%, teacher attendance 90%, fictionalization of existing facilities 100%, furniture repair 100% and purchase of one fourth of the deficient furniture. The long term deliverable will link the incentive with at least 20% increase in the student retention after three years of implementation of the NSB. Progress on both short-term and long-term indicators will be monitored by the PMIU-PESRP through its monitoring and evaluation wing. External audit will be conducted by the Auditor General of Pakistan.

M/S Ernst and Young have been engaged for capacity building of the schoolcouncils and head teachers regarding the NSB implementation and support.