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In a recent meeting, Finance Ministry officials concluded the educational system's main problem is not a lack of funding. Senior economists realized there is adequate funding in the education budget.

Instead, the discussion focused on five central failures of the educational system which, according to the treasury, make it difficult improve the system: poor management and a lack of accountability, centralization and budgetary inefficiency, the quality of teachers and their performance, a lack of measurement and evaluation tools - and lastly - gaps within the educational system in Israeli society.

Some Finance Ministry officials are proposing a plan to do something about it, the first signs of which were apparent in the recent agreement signed with the Israel Teachers Union. According to this agreement, true reform must be based on a number of changes: decentralization and the transfer of broad authority to municipalities and other local educational groups; strengthening the role of school principals with regard to staffing, budgets and allocating resources. Other proposals include simplifying the process of firing bad teachers and performance-based salaries for teachers.

But the treasury is not making do with the handful of ideas: they also want to greatly expand the rights of parents to choose their childrens' schools, as well as cut back on the role and manpower of the Education Ministry. In negotiations with the union, the treasury negotiated for the formation of educational "corporations," which would employ teachers directly, instead of making them state employees. In the end, the union blocked the move, though a consensus on expanding principals' authority was reached.

Some treasury plans have appeared as parts of previous initiatives, such as the Dovrat Commission report. Others are regularly discussed in the Finance and Education ministries. However, the Education Ministry objects to a number of the treasury's main proposals.

In any case, whether the proposals are just "general suggestions" and not a specific action plan, as some claim, the treasury's basic premise remains: there is enough money.

This was the ideological basis for the long list of budget cuts absorbed by the Education Ministry in recent years. In 2000, a group of economists presented then prime minister Ehud Barak with a position paper that Israel was spending NIS 3.5 billion more than necessary on schools as compared with international norms. The treasury adopted the report whole-heartedly even though Education Ministry officials said the report did not take into account a number of issues, such as higher-than-average birth rates and the higher percentage of children in the general population, the vast number of new immigrants and the large educational gaps within Israeli society.

According to the ministry's figures, between 2000 and 2007, the annual education budget was cut by NIS 4.167 billion.

The cuts were not spread out evenly over the entire period, but 62 percent of the cumulative cutbacks were in the years 2003-2005.

The cuts mostly affected two areas: classroom hours and the "activity budget," which funds special programs as well as support for institutions and organizations.

Between 2001 and 2005, 248,000 classroom hours were cut, which meant 12,000 teaching jobs were lost. The damage is clear from the figures: In 2001, grade schools had an average of 46.2 classroom hours a week, junior high schools 53.7 hours and high schools 60 hours. Six years later, the classroom hours were now respectively: 45, 49.7 and 54.9 weekly hours.

"The material [to be taught] has not decreased and may even have grown, the number of pupils per class has stayed the same, but the number of [teaching] hours has steadily declined," said a principal from Be'er Sheva. "We are in a constant situation of pressure and frustration, trapped between the demands and the resources we are given."

Education Minister Yuli Tamir said that since she started "there were no cuts in teaching hours and no teachers were fired. This was an important principle, that we have preserved." The cutbacks made during Tamir's tenure, NIS 301 million, hit the "activity budget," which meant a cut in enrichment programs and support.

"Entire areas have been almost wiped out," said one senior ministry official. The "soul" of the educational system, such as art or extracurricular activities are extremely limited, he explained. "The most concrete harm was in the periphery, since the children of well-off families know how to get by on their own and compensate for the cuts," said the official.

According to figures from the Central Bureau of Statistics, private expenditures on education have been increasing steadily in recent years, and now are 22 percent of total education spending.

However, the treasury claims it has different figures: the education budget has risen from NIS 23.39 billion in 2000 to NIS 25.73 billion in 2007. Part of the difference in figures between the ministries is that the Education Ministry's numbers relate to the "base budget," which applies mostly to teaching hours. The treasury's numbers include all the additional funds added during the year, and claim that the choice to cut teaching hours was made by the Education Ministry.