Lapid Plans to Slash Education Budget as Israel's Deficit Looms Large

Finance Ministry to cut NIS 1.5 billion from education budget; treasury officials sought to avert move, but now say it's unavoidable.

The Finance Ministry intends to slash NIS 1.5 billion off the education budget in 2013-2014. The dramatic cut will reduce hours in state secular and state religious schools and possibly lead to teachers being fired. The decision, made in the last few days by Finance Minister Yair Lapid and senior treasury officials, will likely be seen as a serious blow to the middle- and lower-income classes.

A cut of NIS 1 billion to education was discussed two weeks ago, but treasury officials said it could be avoided by raising funds from other sources. However, in more recent discussions headed by Lapid it was concluded the steep reduction was unavoidable.

One reason for the move to make the drastic cut was Bank of Israel Governor Stanley Fischer's objection to raising the budgetary deficit target to 4.2 percent of the gross domestic product. Fischer also frowned on Lapid's plan to raise the deficit target to 3.5 percent, or even to 3.25 percent, from a 3 percent target in 2013 and a 2.75 percent target in 2014.

Another reason is the huge deficit recently discovered in the state budget, along with treasury officials' assertion that all the planned cutbacks would not balance the new budget and that additional ones are required.

The finance ministry's recent retractions of various planned cuts also compounded the problem. Lapid revoked the plan to freeze the Jezreel Valley train project, estimated to cost NIS 650 million, at Transportation Minister Yisrael Katz's insistence. Lapid also halted plans to raise university tuition and slash the state's support for higher education, thus waiving another NIS 400 million in savings.

Finally, the treasury found it had overestimated the sums expected to be gained by cutting support for ultra-Orthodox institutions.

Lapid's decision to slash the education budget is seen as the first test of his power over Yesh Atid's Knesset faction, party sources said. His main confrontation is likely to be with his party colleague Education Minister Shay Piron.

The 2012 education budget was NIS 36.3 billion. A NIS 1.5 billion cut means reducing teaching hours and freezing computer projects in schools, among other reductions.

A senior treasury official said that in view of the huge deficit, there is no alternative but to cut the education budget in the next year and a half. Although the reduction will be painful, the ministry hopes to increase the education budget gradually beginning in 2015, he said.

The deep cut, the official noted, would not apply to free education for children ages three and four, a program that was recommended by the Trajtenberg Committee.

Earlier this week, Lapid told Yesh Atid members: "It's true there'll be spending cuts and tax increases, but this is temporary. The budget deficit is a hurdle. But within two years every citizen of Israel will feel a change [for the better] and be living in a country that treats his money with respect."

Iliya Melnikov
Nir Kafri