School funding formulas in Sri Lanka

Education Quality Inputs (EQI) scheme, a formula based resource allocation scheme, was introduced to give greater authority and resources to schools in decision making for improving teaching and learning methods in schools. This paper assesses its effectiveness in distributing funds and improving learning outcomes. Results show that the EQI scheme has improving equity. Smaller less facilitated schools rely on EQI funds more, but their utilization of funds is weaker. Evidence suggests that EQI funds have improved teaching, school attendance and learning. However, the effective usage of EQI funds is being affected by several factors as discussed in the paper.