Determinants of financing in the Israeli education system
Author: Taub Center Staff Bulletin Articles

The Ministry of Education’s budget is the second largest of all government ministries, and the budget in 2019 will reach about NIS 60 billion. The division of the budget between Israel’s schools is mostly based on clear budgeting rules that are determined by formulas and predefined guidelines.

This is important because the clearer and more well-defined the budgeting formulas, the less likely that preferential treatment will be given to a certain sector. Nonetheless, a recently published Taub Center study shows that for Israel’s official primary schools that include grades 1-6 (not including ultra-Orthodox schools), the per class and per student budgetary formulas partially reflect not only educational considerations, but social and ideological considerations as well.

The first and central portion of the budget is called “the basic standard,” which is mostly based on the number of classes in a given school, and not the number of students. According to this formula, each class entitles the school to a certain number of teacher work hours, which comprise the main part of the school’s budget.

For budgetary purposes, the minimum number of students per class is 20, and each additional student entitles the school to a rather small supplementary budget (in the event that the number of students in a class is less than 20 the class receives only half of the basic standard budget). Thus, a rise in the number of students raises the budget per class, but budgeting per student goes down as the class size increases, as shown for the sample third-grade class depicted in the graph below.
Budget per class and per student

The cutoff for the maximum number of students considered a “class” for budgeting purposes is different than the number of actual students per class, and is based on the school’s Nurture Index (the higher the index, the weaker the socioeconomic profile of the school’s students).

The cutoff is 32 students per class for schools in which students have the weakest socioeconomic background and 40 students per class for schools in which students have the strongest socioeconomic background. This means that, in practice, two schools with the same number of students could be considered as having a different number of budgetary classes, impacting the schools’ overall budgets.

In addition to “the basic standard, “dedicated baskets” are provided to schools in recognition of special needs or special projects, such as a longer school day, which requires extra teaching hours in every class.

Other dedicated baskets include the “nurture basket” for the purpose of providing resources to improve the educational achievements of students from weak socioeconomic backgrounds; the “mainstreaming basket” for integrating students with special needs in mainstream classes; the “absorption basket,” which is meant to help integrate students who are immigrants or returning residents into the school; and the “prayer time basket,” allocated for prayer hours in Hebrew State-religious schools.

Thus, a school’s actual per class and per student allocation is influenced by a number of different variables, including, among others: the school’s Nurture Index, school size, the presence of a long school day program, and the presence of Special Education classes. Additional factors, such as the median seniority of teachers and the share of teachers with advanced degrees, also influence this allocation.

Taub Center researchers found that, indeed, the vast majority of the budget differences are explained by the factors in the fixed budgetary formulas, making it difficult for education leaders to grant budgetary preferences to one type of school or another.

The variables that best explain the differences in budgeting between schools are the Nurture Index, school size and participation in a long school day program. As seen in the graph, “education sector” is actually the variable with the least influence among those measured.

With this, even after controlling for different aforementioned school characteristics, the study reveals what appears to be a hierarchy in primary school budgets across different education streams in Israel; budgets are highest in the Hebrew State-religious education system, followed by the Hebrew State education system, and are lowest in the Arab education system.

The high allocation for Hebrew State-religious education may be explained by the prevalence of several special budgetary baskets in Hebrew State-religious schools including prayer time, separate classes for boys and girls, and rabbi hours. All of these factors are meant to maintain the special character of the Hebrew State-religious education system.