Background information on funding early childhood and basic education

In Finland, each of the 309 municipalities (in 2021) is obligated to provide basic services for people living in their area. Such basic services are for example health and social services as well as early childhood and basic education.  The funding of basic services is shared between the state and municipalities. The share of funding is divided approximately following way: •    municipality 75 % •    the state 25 % Municipalities receive part of the funds from the state, but the biggest source of incomes are tax revenues since municipalities are entitled to levy taxes. The state funding is not ear-marked. Therefore, municipalities have full autonomy in deciding how to distribute funds between different basic services – such as health, social and educational services. On average 35 % of all municipal expenditure was spent on educational and cultural services in 2019.

State funding

The basis for state funding is the average unit price per student at each level of education. Unit prices are formulated by certain mathematic formula and are worked out regularly on the basis of the real expenditure. Government decree confirms the unit price each year. The exact amount of the state funds to each municipality is determined according to the share of residents aged between 6 and 15. Certain factors increase the government share of funding to municipalities for taking into account different circumstances between municipalities. For example, remote location as well as demographic factors such as population density, age range and morbidity of the population in each area affect to the share a municipality receive from the state.  Private education is quite uncommon in Finland since less than 3 % of basic schools were private in 2019. Funding for private education is determined according to the same criteria as public education.

Early childhood education and care and pre primary

Municipalities have a statutory duty to provide early childhood education and care (ECEC) services for children between 0 and 7 years living in the municipality. On average, approximately 26 per cent of all municipal funds for education were spent on early childhood education and care services. ECEC services are funded by the state, municipalities and fees payed by families. The average share for funding is distributed in the following way               •    government transfers to municipal basic services 30 % •    municipal funding 56 % •    fees collected from the families 14 % The exact amount of the state funds to each municipality is determined according to the share of residents aged between 0 and 6. Fees for the families are determined according to income and size of the family. The maximum fee for a full-time place in a municipal day care center is 288 per month in 2021. The fee includes also meals. The municipality may also decide on lower fees. Families with low income are exempt from fees. Fees for early childhood education has been reduced at the beginning of 2018. One of the aims is to improve the families’ financial situation and to enable more children to participate in early childhood education. The last year of early childhood education and care is called pre-primary education. It is the year before compulsory education and it is for children aged 6-7. That part of ECEC has been compulsory since 2015.  Municipalities must provide 20 hours of pre-primary education per week for all 6-7 -year-old children living in the municipality. The half-day pre-primary education is entirely free for the families - including also free meal. If children stay in early childhood education longer than the pre-primary education hours, typically 4 hours per day, families have fees for that part. 

Pre-primary and basic education

In pre-primary and basic education, pupils receive free •    instruction •    textbooks and other materials •    school lunch •    health services •    welfare services •    transport for pupils living further away from the school Pre-primary and basic education is funded by the state and municipalities. Municipalities are responsible for approximately 75 per cent of the costs. The amount of the state funding is based on the number of 6 -15-year olds living in the municipality. Of all funds for education approximately 40 per cent were spent on basic education. The financial autonomy of schools varies from municipality to municipality. The educational department in a municipality decides the level of autonomy schools can have with budgeting. Quite often municipalities allocate a budget for each school and schools decide independently how to use it.  

General upper secondary education

At general upper secondary education, the tuition is free for students, but they need to buy text books and other learning materials. Students get a free school lunch every day. Also, health and welfare services are free for students. Students’ transport costs are partly subsidised by the state. General upper secondary education is funded by the state and municipalities. The Government decides on the average unit price for general upper secondary schools every year. The amount each provider of general upper secondary education receives from the state is based on the student numbers reported by the education providers. 

Vocational education and training

Upper secondary vocational education and training (VET) is financed by the state and the education provider. The state funding to each provider of education is based on the number of students and their achievements. Each VET provider is free to decide on the use and allocation of funds. The entire VET system - including funding - has recently been reformed. The new system is taken into use gradually from the beginning of 2018. The transition period for new funding model will continue until 2022. The state funding consists of four elements  •    core funding •    performance-based funding •    effectiveness-based funding •    strategy funding In the new model, the role for the performance-based funding is more important than earlier. The outcomes of the education providers such as awarded qualifications and completed modules have a more significant impact on the funding. The effectiveness-based funding includes employment rate of qualified students as well as feedback from students. Both of these will also partly affect to the share education providers receive from the state. The share of the core funding is 50 per cent. In this way the state will guarantee that vocational education and training continues to be provided in all fields and for all students also in future. The reformed funding system is more coherent and simpler than the earlier one: Funding is •    paid to the education providers •    universal – no earmarked shares •    based on budget appropriations, not on actual costs as before. Increase in costs will be taken into account by using an index.

Financial Autonomy and Control

Education providers allocate funding autonomously as long as they fulfil their duty to provide educational services. Once a year the education providers need to provide data on their expenditure to The Finnish National Agency for Education and to The Statistics Finland The Finnish National Agency for Education collects data on how a specific provider has spent the government funds it has received.  

Financial Support for Learners' Families

Families who have school aged children do not get any specific financial benefits because education is free of charge in Finland. The exception of free education is early childhood education and care. At this level families cover part of the costs. Fees are moderate and depend on the income and the size of the family. In addition, families with low income do not need to pay any fees at all. In Finland, all families receive child benefit from public funds for each child under 17 years old. The child benefit aims to cover general costs relating to raising children. In pre-primary and basic education pupils usually go to the nearest local school in the municipality they live. If parents prefer to choose another school for their child they may have to pay the transport costs.

Financial Support for Families of Pupils with Special Educational Needs

Pupils and students receiving special needs education are entitled to assistant services free of charge. Special needs students are also entitled to other pupil welfare services as well as special support if this is essential for the studies. They may also receive rehabilitation allowance on the grounds of their disability. Students get special textbooks and other school material free of charge.   Pupils with special educational needs who stay in school accommodation in conjunction to a special education school receive full board and personal equipment free of charge. In addition, they can travel home for weekends for free.

Financial Support for Learners

Upper secondary students may receive student financial aid for full-time studies. Student financial aid consists of •    a study grant •    a housing supplement •    a government-guaranteed student loan If the student is under 18 years old or under 20 and lives with their parent/parents, the parents’ income may affect the amount of the support. Upper secondary students may also receive school transport subsidy. More information on financial aid for students can be found at the web site of The Social Insurance Institution of Finland

Private Education

Funding for private education as well as student benefits in private institution students are determined according to the same criteria as in public education. Private early childhood education and care is an exception to this rule. The private providers determine their own client fees. Families who choose to place their children in private early childhood education and care are eligible for a private day care allowance and additional income-adjusted support. Municipalities may also pay additional private care support in addition to the statutory private day care allowance.