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Hungary:Early Childhood and School Education Funding

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Hungary:National Reforms in Early Childhood Education and Care

Hungary:National Reforms in School Education

Hungary:National Reforms in Vocational Education and Training and Adult Learning

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Hungary:National Reforms related to Transversal Skills and Employability

Hungary:European Perspective






Since 2013 kindergartens and schools have been funded from different financial sources. The operation of the majority of kindergartens remains a municipal task; thus direct funding still takes place through local governments. However, funding of schools are now provided by the state.

Funding of Early Childhood Education and Care

The funding system is organised as a two-tier system: most of the funding from the national budget is transferred to kindergarten maintainers, which define the budget of kindergartens they operate as part of their own budget. The budget necessary for the operation is jointly provided by the state budget and the maintainer. Occasionally, it is complemented by the fees of services provided to children as well as the kindergartens’ own incomes. The budget is defined by the maintainer of the institutions. The normative contribution of the central state budget is determined annually by the Budget Act. There are no public data available on the breakdown of expenditures according to funding sources, but it is estimated that 80% can be derived from the state budget; however, direct state funding is very low (approx. 1%).

There are two forms of state funding of education: normative (per-capita) and earmarked funding. Normative funding is provided to all kindergarten maintainers (mainly local governments), while earmarked funding is awarded through competitive bidding. In 2013 the former pupil-based state support was replaced by average salary-based support. Now, the state provides salary support, based on a complicated formula calculating the headcount of kindergarten teachers and assistant staff. This budgetary item (approx. HUF 140 billion) represents the vast majority of the budget allocated to kindergartens in 2013 (approx. HUF 165 billion). This approach provides more realistic funding, because it is more adjusted to the number of kindergarten groups, which has a significant impact on costs. The national budget allocated an additional HUF 20 billion for the support of non-teaching staff salaries, which was divided among the maintainers according to the number of pupils. The remaining approximately HUF 5 billion was provided to the maintainers based on various methods and for different objectives.

Funding of Primary and Secondary Education

The funding scheme of public education was basically changed after 2013. The nationalization of the schools had an impact on both the resources and their use: 1) the ratio of direct state funding increased; and 2) schools no more have an independent budget. Financial resources The maintenance system and funding scheme, both under reform, separated the various components of school maintenance also at the national level.

The formerly uniform notion of “maintainer/maintenance” and the interrelated funding obligation were split up into three:

  • Maintenance in the new system covers a smaller area than before: it only means the fulfilment and financing of the professional responsibilities of the school, typically including the teachers’ wages and the material expenditures directly required in education.
  • Operation was introduced as a new notion: it applies partly to payment obligations relevant to the buildings (public utility charges, minor repairs) and partly to expenses incurred in connection with services for the students (e.g. catering).
  • The third component in funding is the owner’s expenditures in connection with the renovation and expansion of the buildings.

Since these expenditures are relatively rare in a school, any relevant technical consideration is thrown into the shade. The resources for the maintenance tasks wholly come from the state budget, whereas the owners’ responsibilities are typically met by the local governments which used to be maintainers and are still the owners of the buildings.

The operating responsibilities are shared between Klebelsberg Institution Maintenance Centre (KLIK) and the relevant local governments. The local governments of any settlements with a population of over 3000 will bear these burdens either directly or, if they pass the responsibility onto KLIK, they have to pay contribution to the latter. For any settlements with less than 3000 inhabitants this responsibility is automatically fulfilled by KLIK and the local government may take the task over only if it can certify its possession of the necessary resources. This measure is clearly aimed at exempting the smallest and, in general, financially poor settlements from the obligation to operate. This measure is especially important as much as Hungarian settlements are ranked among the smallest in Europe, and although the smallest villages generally have a school only if they have regional competence, creating the necessary resources, even if with the involvement of the neighbouring villages, has always been a difficult job in the former system when the local governments had been the maintainers.

At present, no public statement is available to show the ratio of settlements that transferred maintenance to KLIK (from among the big settlements) or took the same over from KLIK (in the group of small settlements). Non-representative studies found that the majority of the big settlements renounced the responsibility and chose the contribution scheme instead, whereas just few took maintenance over from KLIK. To stiffen the conditions of the latter group, KLIK has no obligation to contribute in this case, which means that these local governments can meet their responsibilities from other resources only, which most of them cannot commit themselves to.

As regards direct resources, the new system implied immense transformations in education: the ratio of local government resources (which though greatly originated from subsidies due on normative bases) reached 95% in 2012 at ISCED levels 1-2 and went down to 23% by 2013; and it dropped from 76% to 11% at ISCED level 3 at the secondary level. No public data are available concerning the sums transferred by local governments to KLIK for operation. Schools offering secondary technical training programs have been maintained by the Ministry of National Economy (MoNE), the ministry responsible for technical and adult training, as of July 2015. Specific decisions were made for schools offering various programs. The maintenance-related expenses were shared between KLIK and MoNE.

The funding scheme in vocational training is adjusted to public education funding, provided the institutions with such trainings are financed in accordance with the general rules. But additionally, business associations are also directly involved in financing vocational training (i.e. beyond paying the general taxes in the state budget). This rests on the so-called contribution to vocational training.

Contribution to vocational training is intended to support the operation and development of practical training partly in state-owned vocational training institutions and partly in private institutions with a vocational training agreement with the State and also in higher educational institutions (in certain basic specialties that require considerable practice (BA/BSc)) and to support out-of-school adult training on the basis of the Adult Training Act.

Contribution to vocational training is required to be paid by the various business associations. The rate of the contribution is 1.5 percent of the wage cost. The obligation can be met through the following, as detailed in the law:

- Fulfilling various tasks for the practical training of students in vocational training schools and higher educational institutions; - Giving the contribution to the vocational training schools, based on a cooperation agreement;

- Paying the pre-set costs of certain vocational or language training courses for the employees of the businesses subject to contribution payment;

- Any enterprise failing to meet its obligation to contribute according to the above or meeting it in part only shall pay the remaining amount to the account at the tax authority.

Use of resources

The state-owned institution maintenance centre (KLIK) has a strongly centralized system in effect to finance schools. Schools do not have an independent budget and the use of funds could not anyway be followed at the level of the schools. The 196 regional units (educational districts) of KLIK are not financially independent either, they cannot make their own decision on using the funds. The wages are set and paid through an automatic system, whereas the material expenditures and non-regular wages are subject to central permission. This highly criticized system exceedingly complicates economic management, primarily regarding any expenditures above the employees’ wages (material expenditures, non-regular wages). Moreover, the system lacks resources, which poses yet another problem, given that the state budget was compelled to refill the public educational budget on several occasions during the year. (The rate whereby this affected ISCED levels 1-2 or ISCED level 3 is unclear, considering that the two levels were operated by the same institutional system.) The system is expected to shift to reinforced county-level management, and this county level is presumed to imply more extensive financial independence. No relevant public concept is yet available.

No authentic information is available as yet regarding the school funding practice of the Ministry of National Economy which has taken over vocational secondary education from July 2015.

The payments collected by the tax authority for contribution to vocational training are transferred into the basic training budget of the National Employment Fund. The right of disposing of the basic budget is exercised by the Minister for Vocational and Adult Training. Areas of use:

- items subject to the Minister’s decision:

o operational and development expenditures which may be used for certain vocational training and adult training purposes in either the school system or out of school, as stipulated in the Adult Training Act, by way of tenders. The State is responsible for arranging the tenders;

o training subsidy for business associations, provided they create jobs for at least 50 persons;

- Hungarian part of certain co-financed EU development projects;

- scholarships for students who learn a profession short of professionals;

- decentrally distributed budget (awaiting county-level decisions) wherefrom grant may be given to develop vocational secondary schools and the internship training centres of higher level trainings demanding considerable practical training.

Financial Autonomy and Control

Kindergartens are financed subject to the possibilities of the local government. Considering that the State has been playing a major role in wages since 2013 and that it is based on unified criteria, the former differences have been levelled off: the small local governments operating small kindergartens are now in a fairly favourable condition. Today the maintainers’ different financial conditions mainly impact infrastructure and tangible supplies.

Kindergartens have a different kind of economic autonomy, they depend on the maintaining local government. In big settlements kindergartens tend to concentrate in a major organizational unit, which may be coupled with financial independence in the resulting big kindergarten organization.

In small settlements there is scarce chance for the economic autonomy of small kindergarten units. There are some kindergarten units covering several settlements, subject to dissimilar maintenance and funding schemes. Kindergartens and primary schools used to be merged in a single organization in small settlements. This was almost wholly cancelled after the nationalization of the schools.

The schools maintained by KLIK have no form of economic management. Teachers get their wage from KLIK. The wages are set according to a nationally uniform pay scale, though the differences in wages coming from the previous local government system still exist in a number of places, based on scarce feedback. The schools submit their other demands in addition to the wages (extraordinary wage costs, material expenditures) to the educational districts, though the payment-related decisions are made in the national centre, which means that educational districts do not have an autonomous economic management either. This system does not conclude from the regulations supporting the establishment of KLIK, so no legislative changes are required for any modification. The operation of KLIK cannot at present be inspected from external sources. All financial processes are considered the internal affairs of the institution.

The Public Education Act also provides for the professional autonomy of the educational institutions including schools. But the financial aspects thereof are not duly clarified at present. In kindergartens, following the former practice, the various activities are financed on the basis of the pedagogical program approved by the local government. In schools this is shifted onto the new maintenance entity, i.e. KLIK. The difference in the activities and educational levels of the schools could to a considerable extent be deduced from the difference among the pedagogical programs in the previous period: this was due to the dissimilar financial conditions of the various local governments and to funding various pedagogical programs in several schools within the area of big local governments. According to a non-representative research, this system was not altered in effect in the nationalized schools for one and a half years after nationalization: although the pedagogical programs were supervised, the new maintainer did not bring them closer in effect, so the earlier dated differences remained in this respect. Still, no information is available as to whether the maintainer agrees to finance the individual pedagogical programs to the same extent as before or if there is any balancing process on the way. Based on non-representative research there was no intervention in this respect either, though the lack of institutional budgets considerably hinders clear understanding.

The financial system of the institutions maintained by the Ministry of National Economy is not public as yet.

The local governments agreeing to operate a school will plan their expenditures for the school in their own budget. No comprehensive information is available of either the planning process or the use of financial resources. Some researches found that schools are not independent in this respect either, still, relying on the former and mainly correct relationship between the local government and the school, schools have bigger autonomy here than in their relation with KLIK. No actual information is available about any endeavours to reduce the differences in the operating level. 

Fees within Public Education

By virtue of Articles 88 and 89 of the Public Education Act, the financial coverage for operating the public education system is provided from the state budget and the contribution of the maintainer and the operator, which may be completed by a fee for the service employed by the children and students and any other income of the public educational institution.

Both kindergarten care and participation in public education are free for all, from the students’ perspective. Still, the Hungarian educational system is aware of the notions of tuition and service fee. Tuition must typically be paid in arts educational institutions, for education not connected to the pedagogical program of the specific educational institution and, when learning a profession, for learning the third profession. A service fee must be paid primarily for catering and accommodation in a students’ hostel. Families with low income level or bringing up at least three children are offered 100% and 50% discount from the catering service fee in the kindergarten and the school, respectively, based on Act XXXI of 1997 on the Protection of Children and the Administration of Guardianship.

As regards institutions not under state maintenance, the institutions with a public educational agreement with the State may not collect tuition. In schools with no such contract the maintenance entity sets both the amount of the tuition and the rules on potential allowances.

For vocational training schools not under state maintenance the use of the budgetary contribution is conditional on the conclusion of a vocational training agreement by the maintenance entity with the competent government office.

Financial Support for Learners’ Families

The Family Support Act (Act LXXXIV of 1998 on Family Support) regulates the national system of financial support for families in Hungary. The State offers a monthly schooling grant for the child’s educational and schooling costs. This grant is due to the parent who cares for the child by subjective right until the child has surpassed the compulsory school age or has completed his secondary school studies (secondary school) but until the end of the year when the student reaches the age of 20 the latest. The provision stipulating that the payment of the schooling grant shall be suspended if the child’s truancy reaches fifty lessons has been in effect since the beginning of the 2010/11 school year.

Yet another provision is offered in the form of child raising grant: the parent who brings up three or more minor children is entitled to it by subjective right. The grant is due from the time the youngest child reaches the age of 3 until he reaches the age of 8.

In addition to the State, local governments may determine entitlement to regular child protection allowance on social basis. This is primarily due after children in families with very low income and severely ill children. The local government in the residence shall decide the form of the allowance (pecuniary, in kind).

Starting from 2013 the State introduced free access to school books for primary school students in a phasing-in system, on the basis of the Public Education Act. In the years not yet entitled to free access, the allowance may be due on social grounds, based on the School Book Market Act (Act XXXVII of 2001 on the Order of the School Book Market). Primarily the low income of the family determines personal need, but children in families raising at least three children may also get free school books.

As regards child catering, support can similarly be received by social criteria. Students receiving regular child protection allowance and learning in full-time school education, children in families with three or more children, permanently ill or disabled students all rank among those entitled to this support.

The National Employment Fund grants scholarships to those who learn a profession short of professionals. The professions short of professionals are defined annually in a breakdown to counties.

Financial Support for Learners

The State gives a student ID card to students who in turn can get allowances for travel, culture and purchase and may certify their entitlement to the benefits and allowances due on the basis of the student’s legal relation. The students get the ID card through the school. The student of compulsory school age can get to the school free of charge if his school subject to compulsory enrolment is located in another settlement. In this case the local government in his residence shall offer free travel. Entitlement is certified by the notary.

The student is entitled to remuneration for anything that the school or students’ hostel has obtained and that the student produced or that was created in connection with the student’s legal relation.

Students who learn a profession which is short of professionals according to the government decree for that year in a training form within a vocational school shall get scholarship.

The financial support of those attending vocational training is guaranteed through legal regulations including, as the most important, the Vocational Training Act. By virtue of this Act the student is entitled to the pecuniary benefit stipulated in the student contract. Its rate is fixed to the minimum wage and depends on the ratio of the practical training period to the entire training period.

The State has a scholarship program to support some of the primary school or secondary school students.

Útravaló-MACIKA Scholarship Program [“On the Road – Public Foundation for the Hungarian Gypsies” Scholarship Program] is targeted partly at promoting the disadvantaged students’ success in school and partly at the talent management of students with an interest in natural sciences. The former target is managed within the equal opportunities sub-programs of Útravaló-MACIKA Program. This includes the sub-program Road to Secondary School which is aimed at preparing the students to continue their studies in a secondary school which ends with a secondary school leaving examination; the sub-program Road to Secondary School Leaving Exam which helps the students successfully finish the secondary school; and the sub-program Road to Profession helps overcome the learning difficulties faced by vocational school students. The fourth sub-program is Road to Diploma. It is aimed at improving the disadvantaged students’ equal opportunities in higher education and at supporting the start of their higher educational studies. Over 14 thousand students received a grant of over HUF 2 bln in the 2013/14 school year in the various equal opportunities sub-programs.

Private Education

The effective regulation rests on the Public Education Act which stipulates the persons who and the frameworks wherein they are entitled to found and operate public educational institutions not maintained by the State or the local government. The Public Education Act warrants to support schools maintained by churches (with a legal entity, i.e. relatively big churches) and nationality local governments, whereas the annual budget act determines the state contribution to the activities of schools of minor religious communities and other private maintenance entities.

The details of the subsidy for operation and the funding scheme are stipulated in the annual budget acts. Following the same principle as applicable to local government kindergartens, the act relevant to 2015 grants a uniform average wage-based subsidy to all non-state schools; additionally, it grants a contribution (rated by the number of students) to operating expenditures for the schools of nationality local governments and major churches. This latter amounts to approx. a third or fourth of the average wage-based subsidy.

The catering and school book grant (for the preferential or free service of entitled children and students) applies to each school. Moreover, some major churches get further support to teach divinity and moral education and for the relevant text books.