Almost all municipalities formed in the period following the change of regime maintained a basic school and a kindergarten. Maintaining schools has placed a significant, often unsolvable burden on small municipalities; nearly half of their annual budget expenditure was spent on the operation of public education institutions.
Depending on the financial capability of municipalities, there are huge differences in quality between schools, both professionally and infrastructurally. According to the division of tasks between municipalities, the local governments of Budapest and the counties were responsible for upper secondary schools, dormitories and the pedagogical assistance services, but basic schools and kindergartens were maintained by municipalities.
Public funds play a major role in financing kindergarten care and basic education and upper secondary education (ISCED 1-2 and ISCED 3), but there are significant differences between them. Budget resources were formally allocated to the public education institutions through their maintainers; and until 1st January 2013, maintainers were typically local municipalities.
From 1st January 2013, sectoral legislation has put the public education system on a new basis.
From 1st January 2013, the state has been maintaining public education institutions (except for kindergartens) through the state institution maintenance centre (Klebelsberg Institution Maintenance Centre, hereinafter: KLIK). A significant change was the separation of maintenance and operating tasks. In the case of settlements with a population of less than 3,000, the state also performed the function of operating public educational institutions, whereas local municipalities with a population of over 3,000 were, as a rule, the operators of the municipally-owned public educational institutions maintained by KLIK.
By taking over the task of maintaining public education institutions by the state, the aim was to reduce the differences in quality between schools and to compensate for the quality inequalities resulting from the different income-generating capacities of municipalities.
Since 2013, the following major changes have taken place in the maintenance and funding of state schools:
The phasing-out of vocational training from the public education system started in 2015.
In 2015, the maintenance of schools providing vocational training was taken over from KLIK by the National Office of Vocational Education and Training and Adult Learning (Hungarian abbreviation: NSZFH), an institution controlled by the Ministry of National Economy (and from 2018: the newly established Ministry of Innovation and Technology). It currently carries out its tasks through 41 vocational training centres, to which 371 member institutions belong. Innovative Training Support Centre Ltd. (IKK Ltd.) was established in 2019 with the aim to participate in the renewal of vocational education and training as a methodological centre, to perform the tasks delegated by the Minister responsible for VET as well as to carry out activities as a public administration body for vocational training in accordance with the new Act on Vocational Education and Training (Act LXXX of 2019). Its activities are funded largely by the National Employment Fund. The centralised operation of the sole state maintainer and the separation of maintenance and operating tasks caused difficulties in the day-to-day operation of public education institutions; therefore, adjustments were needed. In order to decentralise the system, as of 1st January 2017, KLIK was replaced by school district centres operating as independent budgetary bodies (initially 58, now a total of 60). In parallel with the reorganisation of the maintainer model, the maintenance and operation of the institutions has again fallen to the school district centres. Consequently, the dual financing that caused tensions (operation financed from the municipal, maintenance from the state budget) was eliminated. School district centres can make their own decisions financed by their own budgets, which promotes a more efficient decision-making mechanism adjusted to local conditions. Furthermore, it results in the decentralisation of the maintainer system that ensures the performance of public educational tasks.
It remains the mandatory task of municipalities to maintain kindergartens and to provide meals in state schools.
The Klebelsberg Centre (hereinafter: KK), the legal successor of KLIK, unlike the former KLIK, does not perform any maintenance or operating tasks. Respecting the autonomy of the school district centres, it promotes the uniform application of sectoral aspects, ensures the professional and strategic coordination of the maintainer tasks of the school district centres, and controls their efficiency and financial management.
Since September 2020, the vocational training system has operated separately from the public education system, and their funding also differs from that of public education institutions. As a rule, the basic task of vocational training can be performed by a vocational training institution (so-called technicums and vocational schools), and the basic task of public education is performed by a public education institution. In some cases and in the form specified by law, a multi-purpose public education institution may also perform basic vocational training tasks, and a multi-purpose vocational training institution may also perform basic public education tasks.
Former vocational upper secondary schools were transformed into five-year technicums, and vocational upper secondary schools specialising occupations became vocational schools, with a three-year training period. With these three-year programmes, a vocational qualification can be obtained, while at the technicums, in addition to vocational qualification, an upper secondary school leaving exam can also be obtained. Instead of the 759 qualifications included in the previous National Qualifications Register (HuQR), the new system, the Register of Vocational Occupations now contains only 174 basic vocational occupations. The vocational training institution operating as part of the VET centre is an organisational unit of the vocational training centre with legal personality but without an independent budget.
Looking at a longer period, it can be seen that total public expenditure on education as a % of GDP declined steadily between 2005 and 2013: from 5.2% to 3.9%. In the three years after 2013, expenditures as a share of GDP gradually increased (to 4.4% by 2016), then stabilised at 4.3% in 2017-2018.
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Source: Central Statistical Office
The nominal value of expenditures increased significantly (by 67%) for the whole period 2004-2018, but unevenly for individual levels of education.
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Source: Central Statistical Office
The increase in expenditures for kindergartens is outstanding (almost 85%), but that of basic schools and upper secondary schools as well as higher education institutions is more modest. After an initial surge, the budgets for basic and upper secondary schools (ISCED 1-3) declined year on year between 2010 and 2013, and then increased significantly, thus, there was an increase of 42% over the whole period 2004-2018. In higher education (ISCED 6), there was also an increase after the initial fluctuations, resulting in a 59% increase over the entire period.
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Source: Central Statistical Office
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