Picture: ISTOCK
Picture: ISTOCK

It is not every day that Treasury reports can make you want to drink in the middle of the day. Then again, it’s not every day you realise a country-wide crisis has been brewing under your nose for a decade and no one noticed it. Over the past seven years there has been a consistent decline in the purchasing power of per pupil expenditure on basic education, and no one has said a thing. To put it bluntly, funding per schoolchild has declined 8% in seven years. In so many ways this undoes any of the advances we think we might have made in the education arena over the last seven years.

For a while now we’ve known that something funny happened in SA between 2003 and 2005, when births spiked 13% and continued to stay high for a few years before coming down slightly in 2008. The leading explanation is the roll-out of antiretrovirals over the same period.

True to form, grade 1 enrolments spiked 13% five years later in 2008, with subsequent enrolment data showing this cohort slowly working its way through the education system, with similarly large cohorts following in their footsteps each year. This group, which we’ve dubbed the "silent ship" in our research group, is now in grade 8.

This weird demographic phenomenon has been confirmed by Martin Gustafsson’s comprehensive analysis of three different datasets: the Department of Home Affairs birth registration data, age-specific data in the Department of Basic Education’s annual survey of schools data and the pupil unit record information tracking system.

The aggregate effect of these increased births (and higher retention in the schooling system more generally) has meant that there were about 670,000 more pupils in 2016 than there were in 2010. That means larger classes, fewer books and fewer teachers per child. But this is only half the story behind this unknown crisis. The other half is that there have been above-inflation increases in teacher salaries for over a decade.

A decade of Government Gazettes together with the Treasury’s estimates of provincial revenue and expenditure documents show that between 2010 and 2016 teacher salaries increased 57%, compared with a 38% increase in the consumer price index (CPI).

The problem with this is that total expenditure on education has only increased by the rate of inflation, about 7% a year, and thus hasn’t kept up with these two factors (increased enrolment and above-inflation salary increases).

Seen together, this has translated into a significant decline in the purchasing power of expenditure on basic education between 2010 and 2017. Looking at the medium-term expenditure framework, the decline is set to continue.

In 2010 we spent R17,822 on average per child, dropping to R16,435 in 2017 and projected to decrease further to R15,963 by 2019 (all in 2017 rand). This is a 10% decline in funding per pupil in 10 years (2010 to 2019).

But CPI is the wrong index to deflate education expenditures because more than 80% of expenditure is on teacher salaries rather than a typical basket of goods

This decline in state funding is already starting to show up in international assessments. According to the Progress in International Reading and Literacy Study (Pirls), the average class size of grade 4 classes in SA was 40 in 2011, but increased to 45 in 2016. Yet this masks that the largest increases were found in the poorest schools. Among the poorest 60% of pupils, class sizes increased from 41 to 48 per class between 2011 and 2016. For the richest 10% of pupils, class sizes only increased from 33 to 35 per class.

Over the same period there was no improvement in reading outcomes across the country. It’s highly unlikely that this systematic decline in spending per pupil over the last seven years is unrelated to the stagnant learning outcomes reported in Pirls over the same period.

Given the centrality of correct discounting to the overall findings here it is worth briefly explaining why using a traditional inflation rate is inappropriate for education. This is also likely the reason that this fact has gone largely unnoticed in SA. Essentially, because total expenditure on basic education increased 7.1% per year between 2010 and 2017 — keeping up with CPI inflation over the period — most analysts have thought that the education budget has been keeping pace with the overall rise in costs. But CPI is the wrong index to deflate education expenditures because more than 80% of expenditure is on teacher salaries rather than a typical basket of goods.

The salient question when discounting expenditures on education is thus: how much money is required in 2017 to buy the same level of inputs used in 2010?

This requires construction of an education-specific discounting index that is weighted at 80% of the cost of teachers (calculated using wage-bargaining agreements in the Education Labour Relations Council) and 20% at regular CPI (for nonpersonnel expenditure like textbooks).

Using this composite index allows us to ask how much it would cost to buy the basket of education "goods" we bought in 2010 (80% teachers and 20% nonteachers).

The results are alarming, as the graph shows. The overall trend in purchasing power per pupil in each province between 2010 and 2019 (all figures in 2017 rand, and 2017 to 2019 figures based on medium-term expenditure framework projections).

Among the poorest 70% of the population it is less than 5% of a cohort who actually enter university. The battle is won or lost in primary school

All of the above is even more concerning in the context of fiscal austerity and significant increases in budget allocations to higher education. As a result of the #FeesMustFall movement, former president Jacob Zuma announced a new government policy of free higher education for poor and working-class families (reiterated by President Cyril Ramaphosa in 2018). This is now reflected in the 2018-19 budget, where higher education received an additional R57bn over the next three years to fund the new mandate.

Evidently, basic education is being thrown under the bus as higher education becomes the new shining star.

Without detracting from the importance of decreasing financial exclusion to higher education for poor and working-class students, it must also be stressed that at most 15% of a cohort go to higher education in SA. Among the poorest 70% of the population it is less than 5% of a cohort who actually enter university. The battle is won or lost in primary school. Given the hierarchical nature of schooling and that university access and success are predicated in the foundations built in primary school and high school, it is an extremely short-sighted policy to continue on the current trajectory of declining per-pupil public expenditure on basic education and rising per-pupil public spending on higher education.

To all who have the inclination to look, it is clear that the low quality of primary schooling in SA is the binding constraint to further educational success, dignified employment, meaningful civic engagement and economic growth.

Our most recent assessments show that 78% of grade 4s cannot read for meaning and 66% of grade 5s cannot do basic maths.

There is no conceivable route for SA to move from the status quo to any desirable future that does not first chart the route of significant improvements in primary education. And to put it bluntly, that is simply not possible when the overall pie is shrinking — a shrinkage that is felt most severely by the poorest pupils in the most challenging contexts. The Treasury needs to reassess how it is funding basic education and explain why there has been a significant decline in the actual resources available on the ground to educate South African pupils.

• Spaull (@NicSpaull is a senior researcher in the Research on Socioeconomic Policy group of Stellenbosch University’s economics department.