The Decree signed by the President of the Republic of Azerbaijan on September 24, 2026, provides for the introduction of a new mechanism for financing state general education institutions. According to the Decree, starting from the 2026–2027 academic year, state general education institutions will gradually transition to per capita financing as the basis for budget funding. At the same time, it is envisaged that adjustment coefficients will be applied to annual education expenditures per learner based on the types of schools and different levels of general education. This approach may enable a more systematic allocation of resources in education financing and establish a closer link between budget expenditures and the actual provision of educational services.

Ilkin Gasimov, Chief Advisor of the Economic Analysis Division at the Center for Analysis of Economic Reforms and Communication (CAERC), stated that the new mechanism primarily represents a change in the approach to the allocation of financial resources. Under the traditional model, staffing structures, maintenance costs, and budget indicators from previous years played an important role in financing schools. Under the per capita financing model, the number of learners becomes one of the key indicators. As a result, a clearer link may be established between the budget funds allocated and the volume of educational services provided. At the same time, opportunities for financing schools based on more comparable criteria are expanded.

Per capita financing is also important in terms of ensuring a more efficient allocation of limited budget resources. Schools differ in terms of student numbers, size, and infrastructure capacity. Therefore, financing based solely on previous budget indicators may, in some cases, create a mismatch between actual needs and allocated funds. The new model, however, makes it possible to link financing to more objective indicators. In this regard, the change concerns not only the technical method of calculating the budget. It also involves the development of a new management approach aimed at improving the efficiency of resource utilization.

According to Ilkin Gasimov, one of the important features of the Decree is the phased implementation of the new mechanism. The Ministry of Science and Education will determine, in coordination with the Ministry of Finance, the list of state general education institutions to be financed on a per capita basis and the number of learners in those institutions for each subsequent calendar year. The phased implementation will make it possible to monitor the outcomes of the new model. At the same time, it will allow the assessment of its impact on the financial situation of schools and the identification of technical and institutional issues arising during implementation. This approach is also important for making necessary adjustments at subsequent stages.

However, the effectiveness of per capita financing will not depend solely on the number of students. The location of a school, the size of its student population, the level of education, infrastructure maintenance costs, and other factors directly affect financial needs. In particular, in schools with small student populations and those located in remote areas, fixed costs per learner may be higher. Therefore, applying a uniform per capita funding standard to all schools in the same manner may not produce the desired outcome. In this regard, the availability of adjustment mechanisms that take different cost structures into account is particularly important.

The CAERC Chief Advisor added that the provision for adjustment coefficients for different levels of general education in the Decree may serve to take these differences into account. The organization of instruction, teacher provision, and other cost components vary across different levels of education. Therefore, the mechanical application of a uniform per capita amount to all education levels cannot be considered an efficient approach. The Cabinet of Ministers has been instructed to determine the amount of annual education expenditures per learner and the procedures for applying the relevant coefficients. Therefore, the specific impact of the new mechanism on the financial situation of schools can be assessed more accurately once these regulations have been approved.

The new financing model will also introduce additional requirements for school management. Linking the number of learners more closely to financing makes accurate accounting of student populations increasingly important. The quality of financial planning, reliability of expenditure data, and monitoring of resource utilization will also gain particular importance. This, in turn, necessitates strengthening budget planning capabilities at the school level and improving financial discipline. On the other hand, linking the new mechanism with results-based management could enable a more systematic analysis in the future of the relationship between financial resources and educational outcomes.

Overall, the new mechanism represents a transition toward a more flexible and data-driven approach to financing state general education institutions. Under this model, the number of learners, the actual volume of services provided, and established expenditure standards become key elements of financing. The long-term outcomes of the reform will depend on several factors, including the extent to which per capita expenditure standards reflect the actual needs of schools, whether objective differences in costs among schools are taken into account, the reliability of the data infrastructure, and continuous monitoring of the implementation process. In this regard, the transition to per capita financing is not merely a change in the method of allocating budget funds. It can also be viewed as the development of financial management in general education toward a more transparent, flexible, and results-oriented model.