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Eurydice

EACEA National Policies Platform:Eurydice
Early childhood and school education funding

Iceland

3.Funding in education

3.1Early childhood and school education funding

Last update: 27 November 2023

Early Childhood and School Education Funding 

Funding of ECEC

The construction and the running of pre-primary schools (including all salaries and operation costs) are by law at the expense and the responsibility of the municipalities. Funds are allocated to the municipalities from the national income taxation to fund, among other things, the construction and running of pre-primary schools. Local taxes may also be used for the financing. Parents contribute a substantial amount towards operating costs at the pre-primary level. The share that parents contribute varies from one municipality to another and in some cases, depends on the circumstances of the parents or whether they have more than one child in pre-primary schools. Overall, parents contribute ranging from ten per cent up to a quarter of the operating costs of pre-primary schools. 

When parties other than the municipalities operate pre-primary schools, the municipalities usually contribute to the cost of the operation but there are no nationwide co-ordinated rules concerning such contributions. It is up to municipalities concerned to allow other parties to operate a pre-primary school according to guidelines in the Pre-Primary school act. 

Funding of Single Structure Education

The cost of education at this level is entirely borne by the local municipalities, except the cost for educational materials, the nationally coordinated examinations and evaluation of schools which is borne by the State. The State also has a school development fund to support school development projects. All decisions regarding the construction and maintenance of school buildings and facilities are made by the local authorities in question. Funds are allocated to the municipalities from the national income taxation. 

Funding of Upper Secondary Education

Costs concerning new construction and initial capital investment for equipment at the upper secondary level are met in such a way that the State pays 60% and the local authorities, one or more, which are formally parties to the construction of the school, pay 40%. All other costs at the upper secondary level are covered by allocations in the State budget. 

Agreements between the Minister of Education, Science and Culture and individual upper secondary schools, made for a period of 3-5 years at a time, specify the principal emphases in school activities, school curricula, studies on offer, the structure of instruction, quality control and evaluation, and also other matters which the parties to the agreement consider feasible. The implementation of these agreements is to be reviewed annually and valid agreements revised if the parties to the agreements consider necessary. 

Financial Autonomy and Control of ECEC

There are no nationwide co-ordinated rules concerning financial autonomy in pre-primary schools. Therefore, the autonomy can take different forms from one municipality to another. Pre-primary schools run by the municipalities are monitored by the local Internal Auditing departments to ensure that finances are used in accordance with the budget and laws and regulations. Every municipality is however obliged by the Pre-Primary School Act to publish a general school policy in the municipality. 

Single Structure Education

Compulsory schools are gradually gaining more autonomy about to human and financial resources and teaching content.  In many cases, head teachers have their own budgets for operation costs, while others have full autonomy concerning staff recruitment. Head teachers have autonomy regarding instruction, teaching methods and the schools’ internal affairs. Compulsory schools run by the municipalities are monitored by the local Internal Auditing departments to ensure that finances are used in accordance with the budget and laws and regulations. Every municipality is however obliged by the Compulsory School Act to publish a general school policy in the municipality. 

Upper Secondary Education

Each upper secondary school is allocated funds from the State Budget according to a mathematical model in which the number of pupils is one of the factors.  The institutions manage the funds according to their budgets, covering salaries, operating and fixed costs.   

All educational institutions funded by the State are supervised by the Icelandic National Audit Office to ensure the accountability of the schools’ financial management. The upper secondary schools are subjected to auditing each year. 

Fees within Public Education

Fees within ECEC

Parents contribute a substantial amount towards operating costs of the pre-primary school level. The share that the parents contribute varies from municipality to municipality and to some extent, on the circumstances of the parents. In general, single parents and students pay substantially lower fees than others and many municipalities offer reduction to parents who have two or more children at pre-primary level.  Parents contribute a tenth or up to a quarter of the operating costs of pre-primary schools. 

Fees within Single Structure Education

The compulsory education is free of charge for pupils and their parents. The parents however pay for meals, usually the basic cost of the raw material used. The public authorities are also not required to provide pupils with material for personal use such as writing supplies and paper. Fee can be collected for subsistence during study trips and field trips, in consultation with parents. Municipalities may also charge for extended stay outside of daily teaching hours as well as for extra-curricular activities based on their special rate. 

Fees within Upper Secondary Education

Education at the upper secondary level is, as such, free, but pupils pay enrolment fees to the school. Pupils also pay for text-books and meals and pupils in vocational education pay part of the costs of materials.  The head teacher decides the amount of these fees.  However, the limit of enrolment and material fee is prescribed in a ministry regulation.  Financial contributions to student body organisations are optional.    

Financial Support for Learners´ Families 

Families Financial Support for Learners´ Families in ECEC

Parents contribute a substantial amount towards operating costs at the pre-primary school level. The share they contribute varies from municipality to municipality, and in some cases depends on the circumstances of the parents. In some municipalities, single parents and students pay substantially lower fees than others. Many municipalities offer fee reductions to parents who have two or more children attending schools at the pre-primary level.

Financial Support for Learners´ Families in Single Structure Education

Family allowances are related to the number of children and are paid until the children reach the age of 18. They are paid according to family income, i.e. there is a maximum amount that may be reduced or abolished if the family income exceeds a certain amount. 

Financial Support for Learners´ Families in Upper Secondary Education

Family allowances are related to the number of children and are paid until the children reach the age of 18. They are paid according to family income, i.e. there is a maximum amount that may be reduced or abolished if the family income exceeds a certain amount. Parents can get some tax reliefs if their children from 18-21 years are attending an upper secondary school. 

Financial Support for families of pupils with Special Educational Needs

Schooling for children with special educational needs is cost free for the families.  Transport, extra staff or teachers trained in various special teaching methods is financed by the government or municipalities through taxes. This applies also for special equipment that they get for support, and special training of some sort. Parents often however have to pay some part of extra training and support, that is not directly connected to education. 

The degree of aid and support for each student is often determined by the counsellors in the schools or the special support services of the municipalities, often based on diagnosis by state diagnostic and counselling service. 

Financial Support for Learners

Financial Support for learners in ECEC

Pupils at the pre-primary school level do not receive financial support. 

Financial Support for learners in Single Structure Education

Pupils at the compulsory level do not receive financial support as compulsory education is free of charge for all pupils in the age bracket 6 to 18. However, families get allowances which are related to the number of children and are paid until the child reaches the age of 18. They are paid according to family income, i.e. there is a maximum amount that may be reduced or abolished if the family income exceeds a certain amount. 

Financial Support for learners in Upper Secondary Education

Pupils who must leave their legal residence for the purpose of studying have the right to non-refundable grants to cover expenses in this respect. This right is defined in a law and a regulation on study grants issued by the Ministry of Education, Science and Culture. In addition, pupils in the certified trades and in some other vocational branches of study have the right to receive study loans from the Icelandic Study Loan Fund

No exemptions are made from the payment of enrolment fees. 

Private and Grant–Aided Education

Private and Grant-Aided ECEC

Local municipalities have the power to allow parents or private parties to operate pre-primary schools. All private pre-primary schools receive financial support from their local municipalities, and therefore the private sector at the pre-primary level could be described as grant-aided private sector. The operational structures of these private pre-primary schools vary. There are, for example, parent-operated pre-primary schools where a special association is formed to run the school, and there are organizations that operate schools in accordance with an ideology. There are no differences in the provision of private education or in the legislative framework as compared to the public sector.   

Private and Grant-Aided Single Structure Education

The Minister of Education, Science and Culture may provide accreditation to compulsory schools or parts thereof which are run by parties other than the municipalities, as non-profit organisations, as limited companies or in other recognised legal forms, given the consent of the municipality regarding the establishment of the school. The consent of the municipality may be subject to there being a certain maximum number of pupils. The same laws and regulations apply to those compulsory schools as to compulsory schools operated by the municipalities. 

According to the Compulsory School Act, compulsory schools that are accredited are entitled to receive contribution from municipality funds for their activities for pupils that are residents in the municipality in which the school operates. The contribution shall account for at least 75% of estimated average total operational cost of each pupil in all compulsory schools that are operated by municipalities in the country according to calculations by Statistics Iceland. This proportion shall apply to schools with up to 200 pupils, but the contribution shall be at least 70% per additional pupil. Calculations by Statistics Iceland for costs consider the change in price levels. The municipalities can finance compulsory schools operated by other parties in the same way as their own schools, but then the schools are not allowed to have school fees that parents pay. 

The Ministry may authorise accreditation of compulsory schools or study programmes within general compulsory schools which are operated according to recognised foreign or international curriculum guide and study organisation. These schools may request school fees according to a contract with the municipality concerned. 

All private schools receive considerable financial assistance from the municipalities and in addition their pupils pay school fees. Teaching in private schools follows the National Curriculum Guide which is in effect for compulsory schools, and pupils take the same nationally coordinated examinations in the grades 4,7 and 9. 

Private and Grant-Aided Upper Secondary Education

Education in Iceland has traditionally been organised within the public sector. There are just a few private upper secondary schools in the country. These schools operate in accordance with the same legislation as the public schools and are subject to the same supervision. All schools receive public funding determined in the State budget. the grant-aided schools can also collect school fees. 

Under the Upper Secondary Schools Act of 2008 the Minister can provide schools, other than public upper secondary schools, with accreditation to carry out instruction at upper secondary level subject to certain conditions. Accreditation of an upper secondary school provides a confirmation that at the time in which accreditation is granted, the activities of the respective school comply with general conditions of the Act and other law and regulations issued under the Act.