PRIMARY AND SECONDARY SCHOOL

EDUCATION

PATRICIA MATTE L.

ANTONIO SANCHO M.

I. INTRODUCTION

In recent years, as of the beginning of the 1980's, Chile has witnesseda surge in the educational facilities available in the country -- registeringparticularly strong growth in the number of private, state-subsidized schools.This growth has been accompanied by almost full coverage of elementary schooleducation, thereby resolving for the first time one of the most importantconcerns of Chilean society. It is important to note that not long ago,in the mid-1970's, the Map of Extreme Poverty elaborated on the basis ofinformation from the 1970 census indicated that 43% of Chilean school-agedchildren did not attend classes. Private education has made an importantcontribution to resolving this nagging problem.

Similarly, the system of subsidizing private schools has been an importantfactor in improving the quality of education. In order to ascertain quality,the Chilean State devised a scientifically-organized system for measuringeducational quality. Information collected in this fashion indicates that-- from their inception -- private educational facilities with the same,or fewer, resources as the State-municipal system have achieved better qualityin the education they provide.

The formulation by the State of clear, non-discriminatory rules has madeit possible for the private sector to increase its activities in the educationalfield. This participation has sought to resolve one of the basic functionsof Chilean society: to provide equal access to elementary school education.Ideally, that education will improve in quality and enable all citizensto adapt to the benefits of development. Thus, the private sector has beenan important co-participant and actor in the resolution of a public problemof significant magnitude.

The primary benefits of this participation have been an increase in thecoverage of elementary school education -- making children's Constitutionaljustify to an education a reality and incorporating the most needy into thesystem; a significant increase in secondary school coverage; a rise in theaverage number of years of schooling Chileans receive; and a substantivedrop in the illiteracy rate.

An important portion of these results has been achieved thanks to theintroduction of competitive conditions between the public and private sectors.Furthermore, the implementation of mechanisms aimed at measuring the qualityof education has meant that this competition been particularly transparentand makes it possible to identify the positive results obtained by the privatesector as opposed to public sector accomplishments.

This chapter provides an in-depth discussion of the structural reformsimplemented in Chile in the fields of elementary and secondary school educationin order to achieve these results.

II. BACKGROUND INFORMATION

It is difficult to understand the educational system present in Chileduring the period of conquest and colonization in terms of current conceptsof public and private education. In effect, the classification of educationin one or another sector depends on the category assigned to the CatholicChurch. At that time, the Church was closely tied to the Spanish crown,and therefore to the State. However, for the purposes of this chapter, weshall consider Church-run education establishments as a part of the privatesector in order to provide greater historical cohesion to the decisive roleof Catholic Church educational establishments in Chile.

By taking this liberty and considering Church-run schools as privateestablishments, we can briefly reconstruct the following chronology of Chileaneducational history.

In the early days of the Colony, the totality of educational establishmentsin Chile belonged to the Catholic Church and religious orders; work forteaching professionals was extremely limited.

During this time period, members of religious orders dedicated to teachingbegan to arrive on Chile's shores. The first were the Franciscans, Dominicans,Augustines and Our Lady of Mercies, who jointly brought the highest levelsof financing of their times to what had previously been the precarious developmentof learning in Chile. In 1589, the Dominicans formed an establishment whichwould later become the first university in the Capitancy General. The Jesuitsarrived in 1593, immediately opened a school and a year later began teachingphilosophy to both clergy and laypeople. The Church's norm that each parishshould maintain a primary school within its borders had a tremendously importantimpact on Chile's pre-independence period.

The first appearance of the independent government in education occurredin 1819 through the issuance of regulations on professorial appointments.Later, in 1821, a decree was passed obligating convents where "thepeople permit these fields of enlightenment" to hold classes in Latin,philosophy and theology. This requirement, however, was not always heeded.As of that date, State intervention began its expansion through the establishmentof programs of study and the creation of a "Teaching State."

In 1832, the Prieto administration dictated a decree aimed at stimulatingprivate participation and reiterated the obligation of convents to maintainschools. The latter, moreover, were required to be free of charge since"the government is convinced that neither our municipal nor nationalpublic treasuries are sufficient to cover such expenditures."1

The State's official doctrine in education -- which established the government'sconcern for such matters -- was enshrined in the Constitution of 1833 whichcreated a Superintendency of Education and called upon Congress to preparea nation-wide general education plan. In 1843, the Ministry of Education-- in accordance with the spirit of the legislation passed 10 years earlierbut in clear violation of some of its statutes -- granted responsibilityfor monitoring partial exams to the National Institute.

As a result of this increased concern by the State for direct actionin education, by the mid 1800's some 41,157 students were registered inelementary school (of which 69% were State schools; the private sector accountedfor 31%2 ).

In the early 20th century, there were some 20 or 22 religious congregationsdedicated to teaching. Of these, several congregations maintained elusivelyprimary schools which, coupled with mission and parish schools, comprisedthe private educational system which functioned, in practice, as a parallelto the State's program.

In the second decade of the century (1910-1920), the results obtainedby both systems were favorable. For example, illiteracy dropped by 50%;elementary school registration totaled some 350,000 students; secondaryschools accounted for 33,000 and specialized academies served 14,000 registeredstudents.

The growth in elementary education, measured in terms of registration,has consistently been much higher than the rate of ageing throughout Chileanhistory. Thus, in the almost 100-year period of 1865-1957 the populationincreased threefold while the school-going population increased 26 times.According to this data, in 1865 only 10.9% of the population of school agewas registered in primary schools. By 1957 that figure had jumped almost6 times to 61.5%3

During the first half of the 20th century, there was a trend toward centralizingthe system and an accelerated involvement of the State in education whichresulted from the concept of the "Teaching State" which had gainedprecedence since the inception of the previous century. For financial reasonswhich will be addressed in a moment, under this system only those establishmentswhich were supported by religious orders or those who charged a fee fortheir services were able to function.

By 1964, the Chilean public education system was highly centralized.The medulla of the system was the Ministry of Education which was responsiblefor formulating and implementing policies and plans, creating and maintainingeducational establishments; determining curricula and the preparation, appointmentand salaries of teachers. Furthermore, the Ministry exercised strong controlover private schools. During the second

half of the 1960's the educational system was modified4and an 8-year cycle of general education was established. Following thisinitial or elementary level, a 4-year cycle of secondary education offeredstudents classes in the sciences and humanities or technical fields. Followingcompletion of the second cycle, higher education was available to continuethe study of areas of specialization.

Table 1

Students registered by type of establishment

(1969-1979)5

Source: Banco Central de Chile, Indicadores Económicosy Sociales 1960-88.

In sum, we can see how education in Chile, from an administrative standpoint,commenced primarily in private hands and how the State gradually acquireda preponderant role through its own educational establishments. The dataon coverage makes this perfectly clear.

As can be seen in Table 1, although there is a consistent increase inschool registration in both the public and private sectors, rates for theformer are considerably higher. This enabled the public sector to increaseits share of overall registration from 68% to over 82% while the privatesector saw its participation drop from close to 32% to 17%.

In terms of coverage, important progress was made during the four centuriesbetween the colonial period and 1960. That year gross school attendancereached 104% (this rate is obviously augmented by an important number ofpeople considered beyond elementary school age -- 11 years old -- attendingprimary school classes).

Despite this progress, illiteracy in 1960 remained at over 15% of thepopulation and coverage of secondary schools totaled 24.6% of the eligibleage group. Similarly, in 1970 the Map of Extreme Poverty,6devised on the basis of data from the census taken that year, showed that43% of school-aged children in extreme poverty did not attend classes. Furthermore,that same year, the average number of years of schooling among Chileanstotaled just 4.5 years. That is to say that centralism, bureaucracy, anda lack of incentives for private education kept Chile from obtaining betterresults in the formation of its human capital despite the resources allocatedto education. Although overall coverage had been expanded, results amongthe most needy sectors of the population were less favorable.

We cannot conclude this brief historical overview without making mentionof the mechanisms utilized in Chile to finance primary school education.During the colonial period and the early days of independence, the authoritiesprevailing at the time provided monies for education through decrees andspecific laws favoring certain educational establishments.

Later, in 1929, Decree Law 5,291 was passed to grant private elementaryor "vocational" schools a subsidy of $25 per student so long asthe schools: remained free of charge; provided education similar to thatimparted in State-run schools; satisfied certain minimum attendance requirements,depending on whether they were rural or urban; and operated during the officialschool year.

Subsequently, in 1951, Law 9,864 established that primary, secondary,professional and teacher's schools which complied with certain requirementshad the justify to a per student subsidy equivalent to half the per studentcost at State-run establishments. Furthermore, this legislation called forthese subsidies to be paid in whole on an annual basis during the firstquarter of each year.

This benefit was subsequently extended (in accordance with article 104of Law 10,343 approved in May of 1952) to all private secondary schoolsnot contemplated under Law 9,864. This meant a subsidy of up to 25% of thecost of running analogous public institutions for schools charging feesfor educational services.

During the 1960's and 70's, legally, the State's subsidy to free privateinstitutions was equal to half the per pupil cost of public education forstudents in the same grade. This can be seen in Chart 2, drawn from "TheFinancing of Private Education in Chile. Problems and Alternative Solutions"by E. Schiefelbein (1970). According to the author, this equivalence wassolely in nominal terms, given that the real per pupil subsidy was muchlower as a result of the drop in purchasing power caused by the delays withwhich the subsidies were paid out.

Table 2

Subsidies to Private Education

(1964-1970)

Year Sub. per Student Fiscal Expense perStudent

Private Ed. ($ 1970) ($ 1970)

Source: E. Schiefelbein, op. cit.

It was common for subsidy payments to be made with a delay of at leasta year. This meant that, on average, the real subsidies in those years representedjust 25% of the costs that the State would have to incur were it to assumeresponsibility for the education provided by private establishments.

Although the State appeared to support private education through subsidies,the amount paid and the method of payment produced discrimination againstprivate initiative in this field. This may well be one of the reasons, andperhaps the most important reason, for the decline in the participationof the private sector as reflected in Chart 1.

III. REFORMS PRIOR TO THE 1980'S

1. ANALYSIS

Until 1980, the Chilean educational system was characterized by a highlevel of State intervention in education, totalling over 80% of registration.Its administration was centralized, presenting the same problems as themajority of public school systems throughout the world: coverage was insufficientand the quality of education was not cost-effective. Furthermore, the systemhad only a limited ability to expand to absorb the poor people it had cometo exclude.

The primary cause of these problems was probably the lack of proper incentivesin the different levels of the educational bureaucracy and among providers.The absence of such incentives meant that a supply of quality educationproportionate to the efforts made by society was not available. Moreover,it would simply not have been possible to efficiently administer the hugecentralized system even if those incentives had existed.

In fact, the system itself was imbued with unpropitious incentives, including:(i) tenured personnel; and (ii) a pay-scale designed at the national levelthat had nothing to do with performance, quality of education or the numberof children attended.

Essentially, the public system was plagued by the following problems:

a. It contributed to a low levels of educational quality and efficiencyin the system (as measured by the drop-out and failure rates), since administratorshad no incentives to attract and retain students. Furthermore, there wereno supervisory or control mechanisms.

b. Teachers' salaries were low as a result of the huge bureaucracy whichconsumed a large part of the budget. The impact of this was heightened bythe monopsonical power of the State as the primary employer.

c. A lack of conditions propitious to competition among different typesof educational establishments. This further contributed to the absence ofefficiency and quality.

d. A rigid and inflexible curricula was established that could not beadapted to local conditions.

e. Community participation in school affairs was not encouraged.

2. GENERAL REFORM CONCEPTS AND OBJECTIVES

The overall structure of the reforms undertaken can be summarized asan effort to establish clear, objective rules that could be applied to allof the actors providing educational services. Particularly important wasthe introduction of a single system of financing based on the number ofstudents served. Within this framework, the public sector was required toadhere to the same regulations, financial rules, administration, controland supervision as the private sector. This established the basis for effectivecompetition which, stimulated by the effort to attract larger numbers ofstudents into the classroom, solved the problem of the lack of coverageand contributed to an overall improvement in the quality of education. Thiswas possible thanks to an objective, impartial system with common parameters.

Under the new system, the State was to play a subsidiary role and promoteequal opportunities in the field of education, engaging in a variety ofareas of action through a framework applicable to both public and privateinstitutions. The State's presence covered all aspects of normal education,that is, pre-elementary (nursery schools), elementary and secondary schools.

As we have noted, prior to 1980 the educational system was composed ofa huge centralized apparatus which impeded incentives for increased efficiencyfrom functioning properly because, at the end of the day, the State alwayscovered the inefficiencies of a system that was already out of control.7

The modernization plan that was implemented sought to achieve the followingobjectives:

a. To improve the quality of education

b. To increase the scope of the educational system

c. To establish equal opportunity in education.

d. To promote freedom of education

In order to achieve these goals, a new system of incentives was devisedwhich, unlike its predecessor, established a framework for subsidies basedon services provided (that is, based on demand). The previous system utilizeda criteria of the "needs of the service" to allocate financing(that is, based on supply).

The concept behind this idea is that the establishment that offers thebest educational service will obtain the largest number of students; sincerevenues will depend on the number of students in attendance, the schoolwill have an incentive to maximize quality. However, the resources availableto the institution do not go beyond those obtained on a per pupil basis.Therefore, schools must seek to provide maximum quality at the lowest possiblecost. To the extent that an educational institution is successful in optimizingits cost-effectiveness, it will gather excess funds and therefore be ina position to expand. This method permits growth in the supply of educationalservices throughout the system while simultaneously bringing an increasein quality.

As a logical complement to this policy, State administration of schoolsthrough the Ministry of Education was eliminated; the Ministry would nolonger continue to be the chief direct employer of teachers at the nationallevel. Thus, public education was transferred to the municipal (local governmental)level, which was to have complete administrative freedom so long as theyadhered to the technical norms emitted by the Ministry (private facilitieswere also required to adhere). This freedom also included, obviously, justifysover the contractual relationship between teachers and the municipalities.

In an effort to achieve the aforementioned goals, in May of 1980 reformswere introduced into the elementary school curricula. These changes werefollowed in 1981 by modifications to the program of study applicable insecondary schools.

3. THE REFORMS

The most important aspects of the administrative and financial reformscan be summarized as follows:

a. Transfer of technical secondary educational institutions to non-profitprivate groups.

b. Transfer of pre-elementary, elementary and secondary schools to municipalities.

c. Creation of incentives through a per pupil subsidy in an effort tofoster the founding of private, subsidized schools.

The transfer of technical schools to private institutions sought to enhanceinvolvement of the private productive sector in the administration and designof programs of study in order to make such educational facilities more compatiblewith the real needs of the labor market. Moreover, the transfer of schoolsto municipalities sought to improve administration of public schools, increasethe number of students registered and improve the quality of the educationprovided. The per pupil payment system promoted competition to obtain andretain students between municipal and private-subsidized schools. This competitiongenerated an increase in the availability of education (without requiringa financial and organizational effort on the State's part).

Table 3

Per Student Subsidy in municipalized and private subsidizedschools

UTM = Monthly tributary unitSource : Ley de Subvenciones.Decreto Nº 3.476, Agosto 1980.

As noted, a per pupil subsidy was established independent of whetherthe educational institution was municipal or private. Differentiation wasmade, however, in terms of the level of education being provided and whetherthe services were provided during the day or in the evening. The value ofthese subsidies was expressed in Monthly Tributary Units (UTM)8as can be seen in Table 3.

Initially the per pupil subsidy was tied to the Consumer Price Index(IPC) -- through the UTM -- and was set at 30% above the existing implicitpublic school subsidy9 and 61% above the subsidiesprovided to private-subsidized educational establishments.

The increment in subsidies for private schools was so large that newschools burgeoned, registering a total increase of 63%. Thus, while in 1980there had been 1,674 private schools, by 1985 there were 2,643.

The new subsidy framework was implemented at the same time as the transfersof public educational institutions from central hands to the local level.The situation in 1983 was as follows:

a. 87% of schools (5,692) had been transferred.

b. 78% of teachers (65,234) had made the shift.

c. 83% of students (1,618,904) ceased to belong to schools run by thecentral government.

Further transfers were suspended in 1983, while a total of 841 educationalestablishments, 19,528 teachers and 331,110 students remained under thetutelage of the Ministry of Education.

At the time transfers were halted, the first effects of the economiccrisis which hit Chile in 1982 began to be felt.10

In June of 1982 the indexation of subsidies according to the UTM wasdiscontinued and instead a policy of adjustments in accordance with salaryincreases in the public sector was established. With the suspension of UTM-tiedindexation, deficits began to accumulated at municipal schools.11Despite the fact that salaries, which constituted the most important lineitem in the budget, could be adjusted at the same rate as subsidies, thiswas not possible with items whose rate of adjustment was greater than thatof public sector salaries. A surge in municipal deficits (see Chart 4) reflectsthe inability of the decentralized state-run system to adjust to the newconditions.

Table 4

Municipal deficits

(Millons of pesos per annum)

Source : Informe Social 1985, ODEPLAN and subsequent modifications.

The economic crisis generated a series of changes which caused distortionsand discrimination against private educational facilities. For example,the State chose to cover a portion of municipal deficits, leaving the remainderto be paid by the municipality. This represented serious unfair competitionagainst the private establishments receiving State subsidies.

In addition, there was mounting pressure to level-off the salaries ofteachers who were no longer State employees with those their colleaguesremaining in the State's employ.12 An attempt was madeat resolving this situation by creating a new allocation that

paralleled subsidy resources. This approach introduced additional disruptionsfor a variety of reasons:

- In addition to the subsidy, the central government was now providingsupplemental pay to teachers. This sent them the wrong signal by suggestingthat the Ministry of Education would always guarantee their income.

- Any salary increases teachers may have received from the municipalitieswere now augmented by the central government.

- Mayors were expressly prohibited from firing employees, meaning thateducational establishments were unable to administer personnel requirementsin accordance with their own needs. One of the basic conditions needed inorder for the subsidy system to work was shattered. It was no longer possibleto establish a cost-quality relationship which maximized profits at eachinstitution given that such an important part of the budget -- salaries-- were set ex-ante.

- Furthermore, legislation was passed (Decree Law 3,476, article 3, letterh) requiring that the Regional offices of the Ministry of Education providea notarized statement indicating that there was not an excess of educationalservices available in areas where a new private school was to be formed.The objective here was to limit freedom of access to the market. The argumentwas that the creation of a successful private school would take studentsaway from the municipality, thereby augmenting the deficit. At the sametime, however, this concept contradicted the very essence of the subsidysystem; under a competitive system, if a private school takes students awayfrom a public institution, the students serve to benefit from the shiftin terms of a better quality education. The municipalities should have beenforced to compete or reduce their costs.

Lastly, rural education became a problem because subsidies were calculatedon the basis of a normal student-teacher ratio (normally 30:1). In ruralareas where it was often not possible to attain this ratio, problems ofunderfinancing tended to arise.

Clearly, Chile's economic crisis of 1982-1985 imperiled the decentralizationprocess and the incorporation of the private sector into the field of education.Fortunately, the process was not abandoned and the schools remaining undercentral control were transferred to municipalities between August and Octoberof 1986.

At that time, moreover, a global effort was made to resolve the institutions'deficit problems. Two hypothesis as to the root cause of those deficitswere discarded: indexation; and rural location.

The conclusion was that the primary and perhaps only cause for the deficitswas the excess number of teachers as compared to the number of students.This situation produced three effects which limited the quality of education:

- The excess generated a deficit, which the State then had to cover.This meant that fewer funds were available to upgrade subsidies.

- Educational establishments utilized their resources to fund the salariesof excess personnel instead of using them to improve the quality of theservice provided.

- Educational establishments and municipalities continued to use thoseresources to cover the deficit, effectively abolishing the incentives createdby the subsidy system.

The solution consisted of limiting and gradually reducing the resourcesallocated to paying off the deficit in such a fashion as to eliminate suchpayments by February of 1988. Simultaneously, the restriction which impededmayors from administering their personnel in a decentralized fashion waslifted.

The problem of supplementary, ad-hoc payments to teachers, inaddition to subsidies, was resolved by upgrading the subsidies paid to theprivate and municipal sectors to meet those of the public sector and doingaway with the additional payments.

The problems of rural schools -- those over 5 kilometers away from urbanareas -- were resolved by establishing a differentiated per pupil subsidyrate in which the subsidy dropped as registration rose.

These steps helped put the incentives that had been introduced into thesystem back into alignment. In addition, the legislation on subsidies wasmodified to allow for the per pupil rate for each grade level and type ofeducation to be expressed in Educational Subsidy Units (USE).

Table 5

Direct Subsidy to Free Schools

Note : 1- In 1987 pesosSource : Official Gazette D.L. 18.681,Thursday, Dec. 31, 1987

The value of the USE was set at $2,480.20 pesos and was be

incremented at the same time and in the same percentage as wage increasesgranted to the public sector. Changes could also be made when discrepanciesbetween the number of pupils effectively attending a given educational establishmentand the average number of registrants was detected through on-site inspections.

The new legislation on subsidies also called for a reorganization ofthe grade levels and types of education eligible to receive governmentalfunding. Furthermore, an article was added which contemplated an additionalsubsidy for technical-professional education. The latter were differentiatedby areas of activity and maximum and minimum payments were established.Subsidies for special education (physically and mentally handicapped, etc.)were included in the new legislation in excess of the standard subsidiesfor educational institutions.

The legislation also noted that these amounts were to be "corrected"by a zone allocation factor, which would increase the assistance providedin proportion to the geographic distance of the province from the centralarea of the country.

Under this new format of subsidization, income for educational institutionswas dependent on the type of services provided, that is, the number of studentsin attendance. Moreover, the expenditure structure was practically fixedon a month by month basis. Rural schools, furthermore, faced the problemsof fluctuations in attendance and a low student/teacher ratio. These conditionsoften meant that the income rural institutions perceived was insufficientto cover expenses, thereby generating operational deficits.

In an effort to resolve this problem, the subsidy granted for studentsin rural schools was increased over 1987 levels and a 'rural factor' wasestablished which varied in accordance with the number of students attendingclasses. The additional expenditures based on this 'rural factor' were cappedat 240,000 USEs annually.

Thus, for between 1 and 11 students the factor was 2.0 of the USE andfor 84-85 students that factor was 1.05. For these purposes, rural schoolswere defined as educational establishments located at least 5 kilometersfrom the closest urban limit.

IV. IMPACT OF THE REFORMS

1. COVERAGE AND PARTICIPATION OF THE PRIVATE SECTOR

The outcome of the establishment of clear, equal rules for all of theactors participating in providing educational services was as follows:

In 1988, 2,004,710 students (children) attended regular primary school(8.3% lower than those registered in 1980) and were distributed among 8,500educational establishments.13

The coverage of private education in terms of private-subsidized schoolsincreased significantly as of 1980. By 1988, the number of students attendingsuch schools reached 610,381, representing 30.4% of the elementary schoolpopulation. As compared to 1980, this meant an increase in private participation-- with State assistance -- of 117%. The first year the new program wasin operation, that increase was just 14%. The increase in the number ofstudents attending private-subsidized schools amounted to 99.3% between1980 and 1988, representing almost double the number of students in freeprivate schools. The greater coverage obtained by private- subsidized schoolscan be partially explained by the negative experience with municipally-runschools (by 1988 registration in the had latter dropped by 27.2% as comparedto 1980).

Table 6

Population Receiving Elem. Education

(Children)

Source : Ministry of Education

In terms of the number of private establishments with State support,the numbers rose from 1,674 in 1980 to 3,583, that is, an increase of 114%.

In terms of the overall rate of school attendance, Chart 7 indicatesthat this figure dropped from 109.8% in 1980 to 102.7% in 1988. This phenomenacan be explained by the reduction in registration of students over age 14at these grade levels.

Table 7

Gross Rate Elem. Schooling

Source : Central Bank of Chile, IndicadoresEconómicos y Sociales, 1960, 1988.

Secondary education, available to those having completed primary school,takes two forms in Chile:14 science and humanities-oriented;and vocational-technical. The former is comprised of four years of studyfollowing which graduates may opt for continued studies at institutionsof higher learning. The latter has a duration of 4-5 years depending onthe area of specialization (trade, industrial, technical or agriculture)and graduates are prepared to move into the labor force.

Secondary school attendance in 1988 totaled 735,701 people, of which601,760 (81.8%) studied science and the humanities, while 133,941 students(18.2) received vocational-technical education. Moreover, 92.1% of studentswere registered in institutions receiving State support while the remaining7.9% attended private, non-subsidized institutions. In comparison, in 1980there was a total of 541,639 secondary school students, of which 371,626(68.6%) studied the sciences and 170,013 (31.4%) opted for technical training.

In 1988, the private-subsidized sector received 40.8% of total secondaryschool registrations, while municipal establishments registered 51.4% ofthe overall total. The remaining students attended private, non-subsidizedschools. The figure for the private-subsidized sector represents an importantincrease over the 1980 figure of 15.9%. It is also important to note thatthis shift took place at a time of overall expansion in the number of secondaryschool registrations nationwide.

The number of students attending private sector schools receiving atleast some State financing -- including those supported by business organizations-- increased from a total 85,981 students in 1980 to 300,079 in 1988. Thisrepresents an increase of 249% in coverage by the private sector, almosttripling the educational services provided in this area. Furthermore, private,non-subsidized establishments charging fees increased attendance levelsfrom close to 50,000 students in 1980 to almost 58,000 in 1988.

Table 8

Population Receiving High School Education

(Children)

Source : Ministry of Education

As noted in Chart 9, the gross secondary school attendance rate increasedfrom 37.4% in 1970 to 52.9% in 1980 and 74.8% in 1988.

Table 9

Gross Rate of High School Education

Source : Central Bank ofChile, IndicadoresEconómicos y Sociales, 1960, 1988.

2. QUALITY OF EDUCATION

One of the primary objectives of the modernization of the Chilean educationsystem, conducted through partial privatization and complete decentralization,was to improve the quality of education. In order to measure this progress,a Student Performance Examination (PER) was devised establish a quantitativeappraisal of the behavior of certain factors linked structurally to thequality of the educational services provided.15

The PER was implemented between 1982 and 1984 only to be temporarilysuspended and subsequently revamped and reintroduced as of 1988. The evaluationconsisted of a series of questions aimed at ascertaining the cognitive knowledgeand affective area development of some 85% of students between 4th and 8thgrade (elementary school). In 1982, the examinations covered Spanish andMathematics, in the cognitive fields and habit formation and social attitudein the affective fields. As of 1983, additional examinations were addedto evaluate the achievement of objectives in the areas of social and naturalsciences as well as a writing sample. The test on habits and social attitudewas transformed into a more specific exam on affective development. In general,the PER provided information to support decisions at a variety of levelssince it:

a) Informed parents of their pupil's results as well as those of theclass and educational establishment as compared to the national average.This information was of use in seeking to select the school with the bestacademic record.

b) Informed teachers of the overall results of each grade level as wellas course-specific results. This data was of particular importance in evaluatingand projecting teachers' performance at educational establishments.

c) Provided the Ministry of Education with centralized, regional andprovincial data.

Even though the PER was suspended in 1982 for a variety of reasons, asof 1988 a system with similar characteristics and identical objectives wasreintroduced. The results provided by new system, known as the System forMeasuring Educational Quality (SIMCE), for the period 1988-1990 are shownin Charts 10 and 11 below.

Table 10

SIMCE Results 1988-90

Mathmatics

Source : Ministry of Education

Table 11

SIMCE Results 1988-90

Spanish

Source : Ministry of Education

There are three aspects of this data worth highlighting:

First, there is the so-called "SIMCE effect," meaning thatthe very presence of this standard of measurement suffices to spur decentralizededucational actors to improve the quality of education.

Second, the suspicion that the quality of education declines as one movesdown the socioeconomic scale is confirmed.

The third aspect is the one that most concerns us here, and that is thatthe quality of education is significantly higher in the private-subsidizededucational establishments than in the municipal schools. This is true atall socioeconomic levels, expect for the lowest, where the quality of theprivate institutions is just under that of the municipal establishments.

Thus, the percentage of achievement obtained by private-subsidized schoolsat upper-middle class (B) and middle class (C) socioeconomic levels in 1988was 5.15% and 6.72% higher in mathematics, respectively, than in municipalschools. A similar phenomenon occurred in Spanish, where the results were6.89% and 9.18% higher in the private-subsidized schools than in their municipalcounterparts. In 1989, the difference dropped to approximately 4%. In 1990,the performance of private-subsidized schools once again was dramaticallybetter than that of municipal establishments. That year, the differencesbetween these two types of institutions were even greater than in previousyears, despite a general, overall increase in quality. Thus, in 1990, private-subsidizedestablishments bettered municipal schools (in socioeconomic groups B andC) by 6.8% and 8.7% in mathematics and 7.65% and 9.2% in Spanish.

However, for the lowest socioeconomic strata, the results of municipalschools were better than those of private-subsidized establishments in bothfields. The difference in 1990 as compared to 1988 was close to 5% in favorof the municipal schools.

The results obtained by private institutions are worthy of note. However,we must not forget that although the level of subsidy is the same for alleducational institutions, private schools do not have the option of dippinginto municipal resources to supplement their needs. It is not peculiar,then, that the qualitative results of the private sector are lower thanthe municipal efforts in the lowest income group. Most assuredly, theseschools require additional funds -- which the municipalities are in a positionto provide -- in order to make up for the home-based contributions and trainingwhich are most likely lacking among these students.

In conclusion, we have seen how the private sector has been transformedinto a vital element in education in Chile and how it has contributed activelyto resolving the problem of coverage which, despite intensive efforts, afflictedChile since the early 1970's. This participation has led to an increasein the average number of years of schooling among the Chilean population;to the incorporation of more people from lower income groups into the educationalsystem; and to strong growth in secondary school education. In terms ofquality, here again the private sector has been a key element in producinga gradual improvement in the education received by Chilean youth. The factthat private establishments provide qualitatively better education thanpublic ones is worthy of special note.

3. EQUAL OPPORTUNITY

The average number of years of schooling, which is directly related tooverall coverage, increased to 8.7 years in 1987 according to polls takenby the Ministry of Planning.16 It is interesting tonote that those polls indicate that the number of years of education amongthe lowest income group (by fifths) increased from 6.4 years for urban headsof household to 8.9 years. In rural areas, the increase was from 4.3 yearsto 7.1 years for the children of families in that income group.

The Map of Extreme Poverty17 from 1970 indicatedthat 43% of children of school age living in extreme poverty did not attendclass. By 1982, that figure had dropped to 9%.

Furthermore, the ODEPLAN studies mentioned earlier indicate that theilliteracy rate among the lowest income groups in urban areas in the mid1980s was 1.9% for those aged 15-19. The figures for older generations weresignificantly higher, namely: 4.4% for those aged 20-39 and 11.4% for thosebetween 40 and 59 years of age.

Although the figures are somewhat higher in rural areas, the drop inilliteracy among youth was still precipitous. Thus, for those aged 15-19,illiteracy totaled 4.1%; for those 20-39 the rate was 9.1% and for thosein the oldest age group, 40-59, the illiteracy rate was fully 29.3%.

V. CONCLUSIONS

Clearly, the establishment of a framework of overall incentives and egalitarianrules of participation which favor competition have permitted notable levelsof development in the participation of the private sector in providing educationalservices in Chile.

Thus, at the elementary school level, the private-subsidized sector grewfrom 14% of total registration in 1980 to 30.4% in 1988, doubling the numberof students attending this type of educational establishment. In secondaryschool education, private-subsidized schools accounted for almost 41% ofregistration in 1988 as compared 15.9% in 1980 -- almost tripling the numberof students registered in private institutions supported by the State.

Furthermore, these increases were accompanied by an expansion in theaverage number of years of schooling received by Chileans, a figure whichleapt from 4.5 in 1970 to 8.7 in 1987. This, coupled with the growing participationof the most needy sectors of the population in the formal educational system,has made a significant contribution toward providing equal opportunity andequity throughout the educational system.

Moreover, the private system has shown that the same contributions madeto decentralized state-run institutions can be used, on average, to providebetter levels of education in private hands. This provides important dataon ways of continuing to improve the educational system without having torely on increased governmental spending.

In terms of the perspectives for the private educational system, as ofthe time of this writing the private-subsidized system faced two threatswhich could significantly hamper its development in coming years. First,the real value of subsidies has dropped consistently since the implementationof the adjustments born out of the debt crisis in the early 1980s. In essence,if we take the initial value of the USE for elementary school educationat the time of the transfer, its present value should be approximately 6,400pesos per student today. However, the subsidy in effect as of March 1991was just 4,359 pesos; in other words, the subsidy has lost 32% of its realvalue.

The second threat is passage of legislation known as the Teaching Statutewhich imposes a certain rigidity in the administration of personnel in themunicipal sector as well as a series of obligatory additional payments tothat personnel. The impact will undoubtedly soon be felt in the privatesector as well even though the latter does not have access to the same sourcesof financing as the municipal schools.

There are, however, additional incentives to the development of privateeducation in Chile. First, legislation known as the Law on Shared Financingtook effect in 1989 which for the first time enables educational institutionswhich receive a State subsidy to charge fees for their services. This legislationcalls for the State subsidy to drop proportionally to the revenue generatedby private schools. This mechanism makes it possible for parents to makecontributions, within their means, toward improved education for their childrenand frees up State resources which can be allocated to strengthening theeducation of those who lack such additional resources.

Another option, although clearly more daring, would be to transfer municipaleducational institutions to the private sector through teachers' associationswhich could acquire the educational infrastructure outjustify or through loans,administering the schools in accordance with their own interests and asthey best see fit.

Notas:
1 F. Encina, Historia de Chile
2 CIDE: La Educación Particular en Chile, Antecedentes y Dilemas,Santiago, 1971.
3 E. Schiefelbein: El sistema escolar y el problema del ingreso a la universidad.CPU 1975.
4 The Reform decrees were signed December 9, 1965.
5 Includes nursery, elementary, secondary and higher education
6 Map of Extreme Poverty, ODEPLAN, Catholic University of Chile, 1974.
7 In 1980 there were 8,846 primary and secondary educational establishmentsin Chile of which 6,370 were state-run, 1,674 were private-subsidized and802 were wholly private.
8 La UTM (Unidad tributaria Mensual) es una unidad de cuenta que crece conla inflación y se reajusta de acuerdo a las variaciones de ésta.El monto a pagar fue el costo promedio de las escuelas en 1980.
9 Es decir, el gasto fiscal dividido por el número de alumnos.
10 Ese año el PGB cayó en un 14,5 %; fue necesario hacer unareducción del gasto fiscal y se incrementaron los impuestos.
11 Aquellos gastos distintos de las remuneraciones aumentaron en relaciónal IPC.
12 In is important to note that 841 educational establishments continuedto depend directly on the Ministry of Education. Most of these establishmentswere located in the Santiago area.
13 The reduction in registration in primary schools can be attributed inpart to a drop in the birth rate. However, an adjustment between the ageof entry into school and the age of graduation was also taking place. Thus,the number of "over-age" student (those outside the 6-14 yearold range) dwindled. Furthermore, it is important to note that internationalexperience shows that once 90% of primary education has been covered, itis common for such variations to occur for the reasons given above. Thisdata is drawn from total coverage.
14 ODEPLAN: Social Report 1984-1985
15 Quality of service includes the following aspects: a) resources andmaterials; b) teacher's training level; c) stability of programs implemented,etc.
16 National Socio-Economic Characterization (CASEN) poll, ODEPLAN, Universityof Chile, 1985 and 1987.
17 Map of Extreme Poverty, ODEPLAN, Catholic University of Chile, 1974-1986.