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Tassia Cruz

Minimum Spending in Education and the Flypaper Effect
Wednesday, October 10, 2018 - 9:00am to 10:50am
Fall 2018
LC Conference Room

Professor Tassia Cruz, Escola de Políticas Públicas e Governo, Fundação Getúlio Vargas, Visiting Scholar

In a decentralized education system, the understanding of how local governments use their budgets and how their budget decisions are influenced by the central government is of essential importance to the design of education funding policies. In Brazil, there are two main national education funding policies that have major implications in all local budgets for basic education: (1) the “Constitutional Minimum,” and (2) the intergovernmental transfers dedicated to education, including all transfers through the “Fund for the Maintenance and Development of Basic Education and Valorization of Education Professionals” – FUNDEB and the “National Development Fund for Education” – FNDE. We find that the elasticity of educational expenses for funds from state redistribution transfers is significantly greater than the elasticity of such government responses to funds collected locally, indicating a flypaper effect equal to 0.678.