The role of the federal government in financing education: Effects of the Fundeb supplement in combating inequality between state educational systems in Brazil

Abstract

Brazil has made important efforts to reduce the inequality of educational funding among its different public education systems. This inequality stems from the asymmetry of resources allocated to finance social rights as defined in the Federal Constitution, which is inherent in its fiscal federalism model. This study analyzes the effect of the federal government's supplement to the Basic Education Fund (Fundeb) on reducing the inequality of state revenues available per pupil between 2009 and 2020. The main objective is to understand, during this period, the effect of federal resources on the interstate inequality of available revenues per student in the public system, particularly following the application of the Fundeb ‘sharing rule’, which promotes the loss of resources from states to their municipalities. To this end, the economic potential of the states, the state constitutional rules for allocating resources to education, school attendance, and the distribution and supplementation of Fundeb are considered. The findings indicate a positive effect of the federal supplementation, mitigating the imbalance created by the ‘sharing rule’ and thus contributing to equity in funding potential across different state educational systems in Brazil.