Will Formula-Based Funding and Decentralized Management Improve School Level Resources in Sri Lanka?

Using the experience of the Educational Quality Inputs (EQI) Scheme in Sri Lanka, the paper examines the distributional aspects of formula-based funding and efficiency of decentralized management of education funds in a developing country setting. The study finds that the EQI fund distribution is largely pro-poor, with the exception of expenditure at the collegial level. The study finds that allocating more funds to more disadvantaged schools alone is insufficient to reduce disparities as the inability of schools to fullly utilize the funds holds back progress. The study findings support the hypothesis that qualified principals, adequate levels of human and physical resources, and state-level monitoring and support is needed for the success of education management at the school level. The study highlights the need to better use information collected from the schools on the EQI scheme to simplify and improve its implementation and effectiveness.