ASSESSMENT OF PUBLIC EDUCATION EXPENDITURE EFFICIENCY ACROSS LITHUANIAN MUNICIPALITIES

Abstract

Efficiency of education expenditure is the ability to maximize the educational achievement given
the resources invested. Although public education expenditure tends to increase, yet this does
not necessarily guarantee high quality of education services. This study aims to assess public
education 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 efficiency
assessment and regression analysis was used to determine its influencing factors. Inputs included financial (public expenditure for education and maintenance) and nonfinancial (composition
of teachers, occupied area, etc.) variables. Passing ratio of Lithuanian (national) language and
math exams were used as efficiency outputs. The context variables represented environmental
factors 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 of
the research are ambiguous. When assessed by the overall passing of the exams, the efficiency
was high, scoring 86-90%. But when evaluated by passing exams with the highest scores, it did
not 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 financing
with the positive influence on the public education expenditure efficiency. Such results support
the decentralization of public education expenditure management and call for alternative output
measures in the Lithuanian public education system.