Scope and Coverage of the NEXA

The National Education Expenditure Accounts seeks to be exhaustive. Thus, it includes expenditures for all forms of education that satisfy the standards and definitions outlined in the Updated Philippine Standard Classification of Education (NSCB 1998) and prescribed by Batas Pambansa Blg. 232 (Education Act of 1982). The term education is taken to comprise all organized and sustained communication process designed to bring about learning. This definition is consistent with the one adopted by the United Nations Educational, Scientific and Cultural Organization (UNESCO), as well as in the revised International Standard Classification of Education (ISCED). The key words in this definition are to be understood as follows (UNESCO/OECD 1997):

• Communication process – refers to a relationship between two or more persons involving the transfer of information, which may be in the form of messages, ideas, knowledge, strategies, etc. Communication may be verbal or non-verbal, direct/face-to-face or indirect/remote, and may involve a wide variety of channels and media.

• Learning – means any improvement in a person’s behavior, information, knowledge, understanding, attitude, values, or skills.

• Organized – signifies that the process is planned in a pattern or sequence with explicit or implicit objectives. It involves a service provider (one or more persons, or an organization) that sets up the learning environment and a method of teaching through which the communication is organized. The method is typically a teacher, i.e., someone who is engaged in communicating or imparting knowledge and skills in order to generate learning, but it can also be indirect or inanimate, e.g., a piece of computer software, a film, tape, or other media.

• Sustained – suggests that the learning experience has the elements of duration and continuity.

It must be emphasized that the NEXA definition does not equate education with learning. While all education activities involve learning, many forms of learning, specifically informal learning, may not be regarded as education as defined above. The Department of Education (DepEd) defines informal learning as a process by which an individual acquires attitudes, values, skills, and knowledge through day-to-day experiences, educative influences, and the resources of his environment. The culture, arts, media, and sports sub-sectors are the most common channels of informal learning. Expenditures to access these channels of learning ‘informally’ (i.e. outside of organized learning environment) are excluded from the NEXA. However, expenditures for culture and sports activities of DepEd are included.

Sources of Funds for Education

The NEXA uses the typology of economic transactors prescribed by the 1993 UN System of National Accounts (SNA) and adopted in the Philippine System of National Accounts (NSCB 2000) to categorize the sources of education funds. These transactors in the economy are also referred to as economic units or institutional units. In addition to being the centers of legal responsibility, these institutional units are also centers of decisions for all aspects of economic life. When grouped together according to their principal functions, they form the institutional sectors of the economy. These include five resident institutional sectors:

• General government, which, beside its political responsibilities and its role in economic regulation and in the redistribution of national income and wealth, produces principally non-market services for individuals or collective consumption;

• Households, which cover all individuals or groups of individuals in their capacity as consumers of goods and services.

• Financial corporations, which are primarily engaged in financial intermediation and auxiliary financial services;

• Non-financial corporations, which are institutional units principally engaged in the production of market goods and non-financial services

• Non-profit institutions serving households (NPISH), which are organized, private, legal, non-profit distributing entities that are principally engaged in the production of non-market services for households.

Aside from the above institutional sectors, another sector is considered when accounting for all transactions in the economy. This is the rest of the world sector.

• Rest of the world, which is the grouping of all non-resident economic units that carry out economic transactions with resident units.

For purposes of the NEXA, these institutional sectors (except households and NPISH) are further divided into sub-sectors deemed as relevant in the analysis of education financing.

The taxonomy of sources of funds in the main matrix was specifically selected to be consistent with the Philippine SNA classification of institutions, and to allow the analysis of a number of education financing issues. The classification scheme will allow the examination of the following:

1. private versus government financing for education;
2. dependence on foreign versus local financing;
3. types of financing mechanisms (e.g., taxes, out-of-pocket, pre-need plans, etc.); and
4. risk-sharing in education sources of funds (i.e., out-of-pocket with low risk-pooling versus government and pre-need plans with high degrees of risk-pooling).

The supplementary matrices adopt more detailed categories of the sources of funds when the breakdown of available data would allow it. For example, general government is further disaggregated into specific sources including the DepEd, the Technical Education and Skills Development Authority (TESDA), the Commission on Higher Education (CHED), and state universities and colleges (SUCs).

Uses of Funds for Education

Following the SNA 1993 recommendation, the main matrix of NEXA makes use of a functional classification (i.e., according to purpose or objectives) of the educational expenditures. Experience has shown that a functional classification would provide information of general interest to policy-makers and would be amenable to a wide variety of analytic applications (OECD and UNSD 1998).

The functional categories of uses for the NEXA main matrix was formulated to be:

1. comprehensive;
2. analytically meaningful and relevant to Philippine policy-making;
3. consistent with existing Philippine education functional classification;
4. to a certain extent comparable with international perspectives on education and also comparable with international education classification schemes; and
5. feasible given the constraints in available Philippine data.

Based on the above considerations, the functional classification or the main categories of uses of education funds adopted in the NEXA are as follows:

• Basic education, which constitutes formal pre-school, elementary and secondary education, and non-formal and special education programs for the same levels of schooling;

• Middle-level skills development, which includes post-secondary education that leads to awards not equivalent to baccalaureate degree and other technical/ vocational training not requiring a high school diploma;

• Higher education, which includes college education, education that leads to a professional degree (e.g., medicine and law degrees both requiring completion of a first university degree for admission) and graduate level education (i.e. programs leading to post-graduate Diploma or Certificate, Masters and Doctoral degrees);

• Job-related training programs, which refer primarily to staff and employee training programs designed to upgrade work-related skills and knowledge;

• Ancillary activities, which include activities that support, promote and facilitate the production/provision and consumption of education services, e.g. general administration, education research, library services and school transport services;

• Other uses of funds, which is a ‘catch-all’ category for education expenditures that cannot be classified elsewhere.