Do local contributions affect the efficiency of public primary schools?

Are public schools that rely on local resources for a greater share of their financing more cost-effective? Could financial decentralization lead to more efficient schools? This paper attempts to answer these questions using cost, financial sources and student achievement data from Philippine primary schools, which are financed primarily from central sources but which also raise funds from other sources, to differing degrees. It concludes that schools which rely more heavily on local sources, such as contributions from the local school board, municipal government, parent-teacher associations (PTA) and other sources are more efficient-i.e. have lower cost, holding constant for enrollment and quality. A 1% increase in the share of financing coming from local sources will lead to a decline in total costs of 0.135%, or about the cost of providing for a place for one more student. Copyright (C) 1996 Elsevier Science Ltd