Background information on funding early childhood and basic education
In Finland, each of the 309 municipalities (in 2023) is obligated to provide basic services for people living in their area. These include for example youth and cultural services as well as early childhood education and care (ECEC) and basic education.
The funding of basic services is shared between the state and municipalities. The share of funding is divided approximately following way:
- municipality 75%
- state 25%.
Municipalities receive part of the funds from the state, but the biggest source of income are tax revenues since municipalities are entitled to levy taxes.
The state funding is not ear-marked. Therefore, municipalities have full autonomy in deciding how to distribute funds between different basic services – such as health, social and educational services.
On average 35% of all municipal expenditure was spent on educational and cultural services in 2019.
The basis for state funding is the average unit price per student at each level of education. Unit prices are formulated by certain mathematical formula and are worked out regularly on the basis of the real expenditure. Government decree confirms the unit price each year.
The exact amount of the state funds to each municipality is determined according to the share of residents aged between 6 and 15. Certain factors increase the government share of funding to municipalities for taking into account different circumstances between municipalities. For example, remote location as well as demographic factors such as population density, age range and morbidity of the population in each area affect to the share a municipality receive from the state.
Private education is quite uncommon in Finland. Less than 3% of comprehensive schools were private in 2019. On the other hand, almost 20% of children participating in ECEC were enrolled in private services (2022). Funding for private education is determined according to the same criteria as public education.
Early childhood education and care and pre-primary education
Municipalities have a statutory duty to provide ECEC services for children between 0 and 7 years living in the municipality.
ECEC services are funded by the state, municipalities and fees payed by families. The average share for funding is distributed in the following way
- government transfers to municipal basic services 30%
- municipal funding 56%
- fees collected from the families 14%
The exact amount of the state funds to each municipality is determined according to the share of residents aged between 0 and 6. On average, approximately 26% of all municipal funds for education were spent on ECEC services.
Fees for the families are determined according to income and size of the family. The maximum fee for a full-time place in a municipal early education centre is 295 per month (2023). The fee includes also meals. The municipality may also decide on lower fees. Families with low income are exempt from fees. In the year before starting their school education, children are expected to participate in mandatory pre-primary education. Municipalities must provide a minimum of 700 hours of pre-primary education. Pre-primary education is entirely free for families, including meals. If children need complementary ECEC in addition to the half-day pre-primary education, families pay fees for that part.
Primary and lower secondary education
In primary and lower secondary education, pupils receive free
- textbooks and other materials
- school lunch
- health services
- welfare services
- transport for pupils living further away from the school
Primary and lower secondary education is funded by the state and municipalities. Municipalities are responsible for approximately 75% of the costs. The amount of the state funding is based on the number of 6 -15-year-olds living in the municipality.
Of all funds for education approximately 40% were spent on basic education.
The financial autonomy of schools varies from municipality to municipality. The educational department in a municipality decides the level of autonomy schools can have with budgeting. Quite often municipalities allocate a budget for each school and schools decide independently how to use it.
General upper secondary education
Tuition is free for students in general upper secondary education. With the expansion of compulsory education in 2021, also learning materials became free for students under 20 years of age completing their first upper secondary qualification. Students get a free school lunch every day. Also, health and welfare services are free for students. Students’ transport costs are partly subsidised by the state.
General upper secondary education is funded by the state and municipalities. The Government decides on the average unit price for general upper secondary schools every year. The amount each provider of general upper secondary education receives from the state is based on the student numbers reported by the education providers.
Vocational education and training
Upper secondary vocational education and training (VET) is financed by the state and the education provider. The state funding to each provider of education is based on the number of students and their achievements. Each VET provider is free to decide on the use and allocation of funds.
The entire VET system - including funding - has recently been reformed. The new system is taken into use gradually from the beginning of 2018. The transition period for new funding model will continue until 2022. The state funding consists of four elements
- core funding
- performance-based funding
- effectiveness-based funding
- strategy funding
In the new model, the role for the performance-based funding is more important than earlier. The outcomes of the education providers such as awarded qualifications and completed modules have a more significant impact on the funding.
The effectiveness-based funding includes employment rate of qualified students as well as feedback from students. Both of these will also partly affect to the share education providers receive from the state. The share of the core funding is 50%. In this way the state will guarantee that vocational education and training continues to be provided in all fields and for all students also in future.
The reformed funding system is more coherent and simpler than the earlier one: Funding is
- paid to the education providers
- universal – no earmarked shares
- based on budget appropriations, not on actual costs as before. Increase in costs will be taken into account by using an index.
Financial autonomy and control
Education providers allocate funding autonomously as long as they fulfil their duty to provide educational services.
Once a year the education providers need to provide data on their expenditure to the Finnish National Agency for Education and to the Statistics Finland. The Finnish National Agency for Education collects data on how a specific provider has spent the government funds it has received.
Fees within public education
Financial support for learners' families
Families who have school-aged children do not get any specific financial benefits because education is free of charge in Finland.
The exception of free education is early childhood education and care. At this level families cover part of the costs. Fees are moderate and depend on the income and the size of the family. In addition, families with low income do not need to pay any fees at all.
In Finland, all families receive child benefit from public funds for each child under 17 years old. The child benefit aims to cover general costs relating to raising children.
In pre-primary and basic education pupils usually go to the nearest local school in the municipality they live. If parents prefer to choose another school for their child they may have to pay the transport costs.
Financial support for families of pupils with special educational needs
Pupils and students receiving special needs education are entitled to assistant services free of charge. Special needs students are also entitled to other pupil welfare services as well as special support if this is essential for the studies. They may also receive rehabilitation allowance on the grounds of their disability. Students get special textbooks and other school material free of charge.
Pupils with special educational needs who stay in school accommodation in conjunction to a special education school receive full board and personal equipment free of charge. In addition, they can travel home for weekends for free.
Financial support for learners
Upper secondary students may receive student financial aid for full-time studies. Student financial aid consists of
- a study grant
- a housing supplement
- a government-guaranteed student loan
If the student is under 18 years old or under 20 and lives with their parent/parents, the parents’ income may affect the amount of the support.
Upper secondary students who live further away from the school receive free school transportation. More information on financial aid for students can be found at the web site of
The Social Insurance Institution of Finland
Funding for private education as well as student benefits in private institution students are determined according to the same criteria as in public education.
Private early childhood education and care is an exception to this rule. The private providers determine their own client fees. Families who choose to place their children in private early childhood education and care are eligible for a private day care allowance and additional income-adjusted support. Municipalities may also pay additional private care support in addition to the statutory private day care allowance.