Public Funding of Education in the Visegrad Group Countries in 2011–2021

The systemic changes associated with the transition from a command economy to a market economy in the V4 countries (Poland, the Czech Republic, Slovakia, and Hungary) have contributed to the formation of closer international relations by countries that find themselves in a similar situation. These changes represented one of the most important challenges for the former Eastern Bloc countries (Piekut, 2015b, p.91). In 1991, the Visegrad Group was established, which initially brought together three countries: Poland, Hungary, and Czechoslovakia, and then, as a result of the breakup of Czechoslovakia, the Czech Republic and Slovakia became members. The cooperation of the Visegrad Group countries is based on the historical commonality of the countries involved, which were subordinated to foreign powers in the past. Today, they function as sovereign countries belonging to the North Atlantic Alliance, while their economies are strengthened by, among other things, belonging to the European Union (EU) since 2004 (Błażejewska, 2016, pp.82-94). The Visegrad Group cooperates in various areas, while one of their common purposes is development through investment in human capital.

The state, by providing public education, influences the building of human capital stock. Investing in education reduces the risk of unemployment, promotes higher incomes, and provides greater opportunities to find attractive employment (Kopańska and Sztanderska, 2015, p.11; Piekut, 2014, p.250). In the 1960s, a comprehensive concept of human capital emerged. The term was permanently introduced into economics as a factor of production. The creators of these assumptions – G. Becker and T. W. Schultz – referred to the capital theory of I. Fisher, who believed that all resources can be treated as capital, provided they are used by the enterprise. According to the views of Becker (1962, pp.9-49) and Schultz (1993, pp.13-19), human capital is created based on the productive skills formed by the accumulation of knowledge in society. Investing in people to develop knowledge and skills leads to an increase in their productivity, therefore providing a positive rate of return in the economy (Piekut, 2016a, p.76). A prerequisite for the advantage of individuals, companies, as well as entire economies is innovation, which depends on the level of human capital. A common task of the Visegrad Group is to support education, increasing the level of competitiveness of the countries (Brożek, Poteralska and Łabędzka, 2022, pp.27-38).

Collecting information on public spending on education allows countries to be compared in terms of investing in human capital. For this reason, this work is devoted to identifying the level and share of public expenditure on education in the Visegrad Group countries in 2011–2021.

The topic of public financing of education has not yet been sufficiently developed and requires constant updating. Scopus database of scientific works was searched for scientific publications that contained the following words in the title, abstract, or keywords: public, funding, education, Visegrad countries. The search was limited to the topics economics, econometrics, and finance and the time period 2019–2023. As a result of the presented activities, no publications on the above-mentioned topics were found. Therefore, the search was extended without specifying the Visegrad Group countries. The Scopus database found 159 scientific articles, books, and book chapters, seven of which discuss issues related to public spending on education in the EU countries. These publications are mostly limited to discussing public spending on higher education.

The purpose of the study is to compare the level of public spending on education in the Visegrad countries in relation to other European countries.

The following research problems were specified for the analysis:

What are the public expenses on education in Poland in 2011–2021?

The condition for obtaining a high level of human capital is the level of education of the population and the quality of higher education. The education of specialists is primarily handled by the state by determining the appropriate level of public expenditure on education, especially the expenditure on higher education. Educated specialists participate in the sociocultural development of a country (Hryhorasz, Czycow, et al., 2020).

Human capital is driven by two main factors: education spending and life expectancy. The increase in these factors is accompanied by a higher level of human capital. According to the research for European and Organisation for Economic Co-operation and Development (OECD) countries, greater autonomy for schools and universities, a higher percentage of children receiving pre-school education, a higher starting age for secondary school, a greater number of teachers per student, and lower financing barriers for higher education all contribute to increasing human capital through higher public educational spending. It has been proven that GDP per capita increases in EU and OECD countries as spending on education increases. Investing in higher education is particularly important because it influences the level of qualifications of specialists, who constitute the core of human capital (Égert, Botev and Turner, 2020). In the EU countries, there is a tendency to increase public spending on higher education per person, aimed at educating high-quality specialists (Kichurchak, 2022). In turn, financing of higher education in Poland is much lower than in the Western countries of EU, which is reflected in the lower level of innovation in the economy (Beniak and Beniak, 2019). The development of higher education is also a solution to emerging inequalities caused by globalization, as they negatively affect primarily unskilled and semi-skilled workers (Hellier, 2023).

One of the countries where research in the area of higher education was carried out is Latvia. It was found that the level of economic development is influenced by the amount of public funds for education. The number of students depends on the amount of public funding, which indicates the important role of the state in increasing the accessibility of universities to citizens (Djakona, Choliawko, et al., 2021).

One way to invest in human capital is to spend money on education. Expenses incurred by households include school fees, tutoring, courses, the purchase of books, prints, newspapers, magazines, internet fees, the purchase of painting, stationery, or drawing supplies (Sztanderska, 2013, p.67).

The level of private income spent depends on many factors, the identification of which is important from the point of view of state education policy. Households spend household budget funds on education unevenly, which depends on factors that include the following:

parents’ education,

Private funds account for part of the overall expenditure on education; however, in Poland, it is mainly financed by state budget revenues. Budget revenues can be distributed directly to institutions fulfilling educational tasks or indirectly to units managing educational institutions – local governments. According to the “Information on the Implementation of Expenditures by Task in 2021” (Council of Ministers, 2022, pp.36-40), 22 budget functions are listed and described in the state budget. The purpose of function 3, “Education, up-bringing and care”, in 2021 was to improve the quality and efficiency of upbringing and education. It also included facilitating universal access to education and equalizing educational opportunities. A special effort was made to provide materials, tools, and teaching aids to improve remote teaching and learning. The measures taken were aimed at ensuring the safety and psychological support of students and employees. Another purpose was to match the qualifications and skills of the population with changes in civilization, as well as to increase the effectiveness of lifelong learning. For tasks related to the implementation of the third function in 2021, 57,780,626 thousand zlotys (over 12,562,644 thousand euros converted as of December 31, 2021, according to the exchange rate presented by the National Bank of Poland) were allocated, of which 277,566 thousand zlotys (over 60,348 thousand euros in accordance with the National Bank of Poland) were funds from the European budget (Council of Ministers, 2022, pp.36-40).

According to data presented by the European Commission, public sources of funding for education (kindergartens and schools) in Poland include the following:

the educational part of the general subvention from the state budget,

The educational part of the general subvention from the state budget is the main source of funding for educational activities. It is determined in two stages. First, its amount is based on the budget law passed each year, but it cannot be lower than in the previous year, having been appropriately adjusted for the value of expenses. The educational part of the general subvention for local governments in 2021 totaled 52 billion zlotys (over 11 billion euros) (Ministry of Education and Science, 2020). The second stage is to establish, by means of an ordinance, an algorithm for the distribution of subsidies among municipalities, counties, and provinces, taking into account the activities they carry out. The basis of the algorithm for allocating funds is their value per pupil. Another source of funding for education in Poland is targeted subsidies, which means money allocated for the implementation of specifically defined public tasks, the amount of which depends on the wealth of the municipality. For the past 10 years, local governments have also been receiving subsidies to finance pre-school educational activities (European Commission, 2023a).

In a situation when the above-described sources necessary to manage and run schools are insufficient, local governments allocate their own funds to finance education. Local government units use the received educational subsidies to varying degrees; however, in most cases, the amount is not enough to cover all expenses (Adamowicz and Kmieciński, 2017, pp.68-78). For this reason, it is assumed that the educational subvention should be allocated at least for the salaries of school employees, while the remaining current expenses are financed from local government funds (Maj-Waśniowska and Góral, 2010, pp.93-106).

In Poland, higher education, like schools and kinder-gartens, is financed from state budget revenues. The amount of funds allocated for this purpose is set each year in the budget law and allocated according to the type of university. In 2018, as a result of the enactment of the Law on Higher Education and Science, new rules for financing universities were introduced.

They resulted in greater freedom for them to make decisions on development and ensure financial stability. The forms of transferring funds to universities include subventions, targeted subsidies, and subject subsidies. As part of the reform, a single subvention was established for teaching activities and maintenance of research potential instead of the previous subject subsidies (NIK, 2021).

Adult education is another human capital investment segment. Sources of raising funds for adult education in Poland include the following:

educational part of the general subvention,

Public education in the Czech Republic is financed primarily from the state budget and the budgets of territorial units (municipalities and voivodeships). Branches can also obtain finances through their business activities and participation in international programs.

The amount of public funds received by primary schools, secondary schools, and higher vocational schools depends on the number of education employees or the number of students attending a given institution. Financial resources are transferred directly from the state budget in normative terms. The distribution of income is handled by the Ministry of Education, Youth, and Sport, which also takes into account the financial cost of aid activities, the different size and structure of fields of study in schools in voivodeships, and the different level of teachers’ remuneration in individual institutions.

Public universities receive subsidies on a per capita basis, which constitute approximately 75% of their income. The remaining funds are obtained from student fees, income from teaching and additional activities, income from property, bequests and donations, and from other public sources.

Private schools obtain subsidies through the provincial authorities based on an agreement for a given school year. These schools usually charge tuition fees.

Society in the Czech Republic is well educated. According to data for 2020, over 94% of people aged 25–64 have at least upper secondary education (European Commission, 2023c).

In turn, Slovakia is a country where early childhood, primary, and secondary education is free, which is guaranteed by the constitution. Public financing comes from the state budget, the budgets of higher territorial units, and the budgets of municipalities. However, these funds are supplemented with income from renting space, donations, donations, profits from business activities, and other sources. School financing is consistent with the normative principle. The amount of income received by institutions depends on the staffing and economic needs of the educational process and the number of students.

Studying at public universities in Slovakia is free of charge if it is full-time. The primary source of financing for universities is subsidies from the state budget; however, they may obtain funds from other sources to cover the operating expenses. In the Slovak education system, it is also possible to provide subsidies to non-public universities (European Commission, 2023d).

In Hungary, kindergartens are mostly financed by local governments, as the municipalities are responsible for providing kindergarten care. In addition, there are two possible forms of support for their operation by the state, which include normative subsidies and targeted subsidies. Standard subsidies are available to all kindergarten caregivers, while specific subsidies must be applied for.

Since 2013, schools in Hungary have been maintained by the state (except kindergartens). Higher education receives financial support from public funds, the amount of which is included in the annual budget in one amount. In addition to this type of financing, universities obtain income from tuition fees paid by students and from their business activities. The state also offers subsidies, which are established on normative principles.

It is possible for universities to be maintained by non-state institutions, including national governments, private institutions, and religious legal entities.

As of 2015, the percentage of people aged 25–34 with higher education in Hungary is low and amounts to approximately 30%–31% (European Commission, 2023e).

Education is an important instrument for personal, social, and national development, which can affect the formation of social inequalities. It is increasingly believed that spending money on education is one of the best financial investments. Well-educated people, in addition to obtaining practical knowledge, have horizons that enable them to enjoy life (Polcyn, 2017, pp.36-43).

The research material was data from the European Statistical Office (Eurostat). Databases presented by Eurostat are the basic source of statistics for countries belonging to EU, which are obtained from the National Statistical Offices. The published databases contain a coherent and consistent set of macroeconomic indicators, showing the general picture of the economic situation. They are used for economic analyses, forecasts, policymaking, and design (Eurostat, 2021).

Expenditure data is collected in accordance with the International Classification of Government Functions (COFOG) based on the European System of National Accounts. Government spending is divided into 10 categories: general public services; defense; public order and security; economic affairs; environmental protection; housing and social affairs; health; recreation, culture, and religion; education; and social protection (Eurostat, 2023). This article collects data on public spending on education.

The object of interest was four countries: Poland, the Czech Republic, Slovakia, and Hungary, which are members of the Visegrad Group. One variable was used for the study: the ratio of public expenditure on education in relation to GDP, which was expressed as a percentage. The analysis was based on the use of measures of variation (variance, standard deviation, and coefficient of variation), measures of skewness, and measures of location (arithmetic mean, median, minimum, and maximum). Average expenditure in percentage of GDP, variance, standard deviation, coefficient of variation, and skewness coefficient were calculated for each country separately for the years 2011–2021, the values of which are presented in the table 1. Based on the statistical measures used, such as the calculated median, quartiles, and minimum and maximum values, a box chart was created. The smallest square in the middle of the box chart indicates the level of the median, while the top and bottom of the so-called boxes reflect the values of the first and third quartiles, respectively. The horizontal lines at the end of each graph indicate the range of these values, which do not differ from others (Wiktorowicz, 2020).

The study covered the period 2011–2021. The choice of the research period was guided by the desire to observe public spending on education in the Visegrad countries during the 10 years when they were operating within the structures of EU. The analysis was carried out using Excel and Statistica. A critical analysis of the literature was used to develop the theoretical part.

One way to present the level of public spending on education is to tabulate its share in relation to GDP. The source of data on European statistics and indicators, including data on education spending, is Eurostat. The Statistical Office of the European Union provides statistics compiled through cooperation with national statistical offices, which make it possible to compare countries and regions.

The level of public spending on education as a percentage of GDP in Poland from 2011 to 2021 is shown in Figure 1. The data shows that that the share of spending on education has fluctuated over the years. The highest proportion of public spending occurred in 2011, with 5.5% allocated to education at that time. In contrast, the lowest spending was in 2017 and 2021 (4.9%). The analysis found that, on average, Poland spent 5.2% of GDP on education during the time period presented. The standard deviation is 0.2, which means that in all the years studied, the share of public spending on education on average deviated by 0.2 from the average value.

Figure 1.

(Source: Own compilation based on Eurostat data¹)

To determine public spending on education, a comparison was made between Poland and the Visegrad countries for the period 2011–2021. States that are members of the grouping cooperate with each other in many areas. Poland has been contrasted with other V4 countries because of the historical, geographic, cultural, ethnic, or religious ties that unite them, which they want to preserve and further strengthen. In 2004, all states joined the structures of EU (Miś, 2022). For the analyzed countries, statistical measures were calculated based on data on expenditure on education.

The Visegrad Group’s public spending on education in 2011 and 2021 is shown in Figure 2. Poland, the Czech Republic, Slovakia, and Hungary allocated uneven levels of cash. In all the surveyed states in 2021, compared to 2011, an increase in expenditure was recorded. Poland was characterized by the highest level in both analyzed years. In 2011, it amounted to 20,615.7 million euros, and in 2021 to 28,382.7 million euros. It is, therefore, noted that Poland had the largest increase in public funds, amounting to 7,767 million euros. Slovakia, on the other hand, has the smallest increase, for which the gap was 1,205.7 million euros. In this country, 5,154 million euros were spent on education in 2011, while in 2021, it was 7,708.7 million euros, indicating the lowest level of spending in both analyzed years relative to the other countries.

Figure 2.

(Source: Own compilation based on Eurostat data²)

The highest level of public spending was recorded in Poland, which is conditioned by the largest population compared to the countries analyzed. In 2021, Poland’s population was 37.75 million, the Czech Republic’s population was 10.51 million, Hungary’s population was 9.7 million, and Slovakia’s population was 5.45 million (World Bank, 2023). Thus, Poland is seven times more populous than Slovakia, and hence, the level of public spending on education expressed in monetary terms is much higher.

A summary of the level of public expenditure on education per capita in the V4 countries is presented in Figure 3. It was noted in the data that in each of the countries in 2021, compared to 2011, there was a significant increase in expenditure.

Figure 3.

(Source: Own compilation based on Eurostat data³)

Among the Visegrad Group countries, the Czech Republic was characterized by the highest level of expenditure both in 2011 and 2021. The increase in expenditure was also the highest in this country and amounted to 423.58 euros per inhabitant in the compared period.

In 2011, the lowest expenditure on education was observed in Hungary (516.85 euros), while in 2021, the lowest expenditure was recorded in Poland (751.86 euros). Therefore, in Poland, there was a smallest increase in expenditure: EUR 210.24 per person.

Expenditures on education in Poland, Slovakia, and Hungary were similar, that is, they amounted to over 500 euros in 2011 and over 700 euros in 2021 per capita. In turn, the Czech Republic differed significantly from other countries, achieving higher values and growth in the mentioned category of expenses.

As can be seen from the data presented in Figure 4, Poland is the only country with a significant decrease (0.6 p.p.) in education spending in 2021 compared to 2011. This is an unfavorable phenomenon, as countries that increase educational spending achieve faster economic growth in the future. Slovakia and Hungary had an unchanged share of education spending as a percentage of GDP during the periods analyzed – Hungary 5% and Slovakia 4.3% in both the years analyzed. The Czech Republic, on the other hand, saw an increase in educational spending (by 0.5 p.p.). In 2011, Poland spent the largest percentage of GDP on education compared to the Visegrad Group, well ahead of the analyzed countries. In 2021, the situation changed and in this regard, Poland was in third place.

Figure 4.

(Source: Own compilation based on Eurostat data⁴)

A lower level of public spending on education means less investment in human capital, which can result in slower economic growth. However, the efficiency of the money spent should also be considered for a detailed analysis. Investment in education is now seen as the most important factor in increasing competitiveness, leading to more sustainable economic growth (Jabłoński, 2021, pp.91-120).

To accurately analyze the public educational expenditures of the Visegrad Group, the data for the V4 countries were tabulated with those of EU. As Figure 5 shows, in 2021, the average level of public spending on education for EU was 4.8% of GDP. The Visegrad Group countries, with the exception of Slovakia, showed values slightly above the EU average.

Figure 5.

(Source: Own compilation based on Eurostat data⁵)

Slovakia, on the other hand, achieved a 0.6 p.p. lower level of educational spending compared to EU, and only four countries allocated a smaller percentage of GDP to this purpose. Ireland had the lowest spending (3%), while Sweden had the highest (6.7%). Scandinavian countries invested the most in human capital.

Poland is one of the few states in EU with a downward trend related to public spending on education. Currently, Poland is gaining a competitive advantage through relatively low salaries, increasingly better infrastructure, and geographic location. However, the most important factor in competitiveness is the country’s technological development, which is influenced by a well-qualified and educated workforce, created by an adequate level of educational spending (Obserwator Gospodarczy, 2023).

For obtaining data on public spending on education as a percentage of GDP in the Visegrad countries from 2011 to 2021, statistical measures were tabulated. As the analysis showed, the highest average level of public spending was achieved by Poland (5.16%) and the lowest by Slovakia (4.11%) (Table 1). The Polish state, therefore, had the largest share of educational spending as a proportion of GDP in relation to the other countries in the survey.

The standard deviation was then used to compare the data. It showed by how much all the units of a given community, on average, deviated from the arithmetic mean of the studied variable (Luszniewicz and Słaby 2008, pp.25-43). As can be seen in Table 1, the level of standard deviation was highest in the Czech Republic (0.37). This means that public educational spending expressed as a percentage of GDP differed on average from the arithmetic mean, which was approximately 4.56 for the Czech Republic (by about 0.37). The standard deviation took the lowest value for Slovakia (0.18), indicating the smallest deviation from the average.

This study also compared the values of the coefficient of variation. Its figure calculated for public spending on education in each country of the Visegrad Group was the highest for the Czech Republic, which means an 8.16% average relative variation in the observed characteristic of change (public spending on education in percentage of GDP) over the years studied. This is not a high variation, but by far the highest compared to other countries. The coefficient of variation calculated for the Czech Republic was about 4.28 p.p. higher than for Hungary, the country with the lowest level (3.88). Poland and Slovakia also had low variability due to coefficient values oscillating between 4.27 and 4.41.

Measures of skewness indicate the location of the pre-ponderance of observations. A skewness coefficient is used for analysis to accurately assess the strength and direction of asymmetry (Major and Niezgoda, 2003, pp.40-62). According to the data in Table 1, the value of the skewness coefficient in Poland and Slovakia is similar and takes on positive values, at around 0.2. This proves the right-sided asymmetry of the distribution of the variable “public spending on education as a percentage of GDP,” because the median is smaller than the average. From this, it follows that most of the results were below the average. The situation is different in the Czech Republic and Hungary, where the skewness coefficient takes negative values (−0.18 for Hungary and −0.12 for the Czech Republic), conditioning a left-skewed distribution (the median is larger than the average). Most of the results in the Czech Republic and Hungary are above mean.

After that, an analysis of public spending on education as a percentage of GDP was conducted for the Visegrad countries (Figure 6). The following statistical measures were used: median, minimum, maximum, first and third quartiles. The median, or middle value, reached the highest level for Poland (5.1), followed by Hungary (5.0), the Czech Republic (4.5), and finally Slovakia (4.1). In addition to the median, two further quartiles were introduced – quartile one Q1 and quartile three Q3. The quartiles make it possible to examine the structure of the community by dividing the community into 25% and 75% (quartile one) or 75% and 25% (quartile three) (Zimny, 2010, pp.22-34). As can be seen from the chart, the largest difference between the first and third quartiles occurred in the Czech Republic (0.5); it represents a quartile spread covering 50% of the middle observations. The gap in Poland, Slovakia, and Hungary is 0.4.

Figure 6.

(Source: Own compilation based on Eurostat data⁷)

The lowest share of public spending allocated to education as a percentage of GDP occurred in the Czech Republic and Slovakia, taking a value of 3.9%. In the Czech Republic, it was recorded in 2016, while in Slovakia, it was recorded in 2016, 2017, and 2018. The highest public spending on education expressed as a percentage of GDP was achieved by Poland in 2011 (5.5%). This is shown by the minimum and maximum values, which limit the graphs in the highest and lowest variants of the observed characteristic variable, respectively.

Based on the analysis, the following conclusions were made:

From 2011 to 2021, total government and local government spending on education as a percentage of GDP in Poland were the highest in 2011; in contrast, the lowest were in 2017 and 2021.

An analysis of the level of public spending in the Visegrad Group over a 10-year period showed that Poland allocated the highest amount to education. In relation to GDP, Poland also had the highest average level of public spending in 2011–2021. This indicates the highest average investment in human capital compared to Slovakia, the Czech Republic, and Hungary. In recent years, however, it is noted that the Polish state has been experiencing a negative trend related to the decline in public spending on education in relation to GDP. For this reason, in 2021, both the Czech Republic and Hungary overtook Poland in educational spending presented as a percentage of GDP.

Increasingly lower spending on education is a negative phenomenon. Economic development and, especially, the process of convergence involves, among other things, building competitive advantages over other countries, for which education can be used. This is demonstrated by the example of South Korea. The country became an economic powerhouse in a few decades, moving from a low-income economy to a high-income economy. The reasons for this include high investment in education by the public and private sectors. As a result, the literacy rate has risen from 30% in the 1950s to 99% today, with tertiary enrollment rates among the highest in the world. The high quality of human capital has created an advantage for the Korean economy (Oleksiuk, 2019).

This study brings value to the area of management because the presented research provides important information for decision-making bodies in the planning of education expenditure in state budgets. According to the publication, investing in human capital is an important aspect of the competitiveness of economies. Therefore, we should strive to increase educational expenses every year.

A lower level of public spending on education means lower investments in human capital, which may result in slower economic growth. However, a detailed analysis should also take into account the effectiveness of the funds spent. So, in the future, it would be worth conducting research on the effectiveness of public educational expenditure.