Israel's Treasury Changes Policy, Causing Potential Delay in Building of New Schools

'This is a system flaw that will negatively impact the children of Israel,' Tel Aviv municipality’s director-general says

Finance Minister Moshe Kahlon at a press conference, April 9, 2019.
Nir Keidar

The Ministry of Finance has recently changed its method of budgeting for the construction of new schools, which may postpone the building of new classrooms in schools and kindergartens.

The Education Ministry usually transfers 2.9 billion shekels ($810 million) a year to local authorities for the building of the 3,000 new classrooms required annually. According to recent estimates by the Federation of Local Authorities, this amount does not cover the cost of building all needed classrooms, only about two thirds of them.

In order to close this budgetary gap and enable the construction of all the required classrooms without delaying the opening of the new school year, the Ministry used to give local authorities an unofficial commitment that the funds would be transferred later in the year. This enabled the commencement of construction before the final ratification of budgets.

The Treasury’s Accountant General has now instructed the Education Ministry to desist from giving such unofficial assurances, out of concern that the budget be exceeded, also claiming that this procedure was a breach of proper administrative processes. Local authorities will now have to wait until funds are actually transferred, only then starting construction.

“The significance of this, in a world in which budgetary limits are not coordinated with needs, is clear” says Haim Bibas, the head of the Federation of Local Authorities in a letter to Finance Minister Moshe Kahlon. “The building of new classrooms will begin only after financial guarantees are given. Thousands of pupils will not have schools to go to [when the new year begins].”

“This puts local authorities in an impossible situation”, Tel Aviv municipality’s director-general Menachem Leiba told Haaretz. “The previous arrangement took into account the slow budgeting process that prevails here. The state can’t transfer the funds on time, but schools must be ready on time. The arrangement allowed us to build without worrying that the funds may ultimately not arrive. The commitment was a weak and unofficial one, but it was always met.”

Leiba says that the policy change may impact the rate of construction that’s required. “As soon as the Education Ministry recognizes the need for a new structure, the transfer of funds may take a year or more. Construction demands more precise timelines. This is a system flaw that will negatively impact the children of Israel”, added Leiba.

The Ministry of Finance said in response that “the Accountant General’s directive is a demand to abide by regulations. Allocating funds to schools in advance is done in compliance with the law.”