Private school funding and energy price crisis

On behalf of the Association of German Private School Associations (VDP e.V.), DIW Econ has investigated whether and how stable the financing system of independent schools in Germany is with regard to extreme increases in energy costs.

Based on an economic theory analysis, it can be shown that the financing model, which is characterized by the ban on special education as well as by inappropriate calculation bases and inadequate adjustment mechanisms for financial aid, does not provide schools with sufficient room for manoeuvre to compensate for price shocks such as those currently occurring in the energy sector.

A model calculation shows that an average independent school could face a funding gap of about 10% of total annual revenue in 2023. Therefore, a timely compensation of existing costs, taking inflation into account, would be necessary to maintain high-quality school offerings even in these times of crisis.

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