Appendix to the Education Chapter:
Data on the vouchers method for education
The year 2012 is the last year for which data is available on the breakdown and distribution of education expenditures. Between 2012 and 2014 there was a significant increase of 10.5% in total expenditure on education.
From here on, all data are from 2012.
National expenditure on education and higher education amounted to NIS 78.2 billion, which was distributed as follows:

General administration  NIS 2.1 billion.

Preschool  NIS 7.52 billion.

Primary  NIS 25.26 billion.

Secondary  NIS 19.78 billion.


Universities  NIS 10.09 billion.

Other postsecondary  NIS 7.7 billion.


Textbooks and stationery purchased by parents  NIS 0.84 billion.

“Investments and capital transfers”  NIS 4.9 billion.

In this document, we deal only with the education of children (ages 3 to 18). Therefore, we included only the following:

General administration  NIS 2.1 billion.

Preprimary  NIS 7.52 billion.

Primary  NIS 25.26 billion.

Secondary  NIS 19.78 billion.

Textbooks and stationery purchased by the parents  NIS 0.84 billion.

“Investments and capital transfers”  NIS 4.9 billion.
The total is NIS 60.4 billion spent in 2012 on the education of our children.
In the 2012/3 school year there were 2,027,360 pupils aged 3 to 18, which means that the annual expenditure per student was NIS 29,792, and the monthly expenditure per student was NIS 2,483.
Expenses are not uniform at all ages. In order to calculate the expenditure per student in each of the three age groups, here we approximate, in the absence of explicit information, using the following assumptions:

We assume that the textbook item was divided proportionately between primary and postprimary education.

We assume that expenditures on general administration and capital are proportionately divided between preprimary, primary and postprimary education.

We assume that the distribution of the number of students between the three age groups in 2012 was similar to that in 2014/5, for which we have precise distribution data.
Subject to these assumptions / approximations, the student population aged 3 to 18 was divided as follows:

Preprimary: 22.1% of the children.

Primary: 45.5% of the children.

Secondary: 32.4% of the children.
Accordingly, the breakdown of total expenditure by age groups was as follows:

Preprimary: 7.52 + 1.547 (administration and capital) = NIS 9.067 billion.

Primary: 25.26 + 0.49 (textbooks) + 3.185 (administration and capital) = NIS 28.935 billion.

Secondary: 19.78 + 0.35 (textbooks) + 2.268 (administration and capital) = NIS 22.398 billion.
And divided by the number of students calculated in each age group, the total expenditure per student in 2012 was:

Preprimary: NIS 9.067 billion for 448,046 children  NIS 1,686 per month per child in preschool.

Primary: NIS 28.935 billion for 922,449 children  NIS 2,614 per month for children in grades 16.

Secondary: NIS 22.398 billion for 656,865 children  NIS 2,841 per month for children in grades 712.
Again, these numbers are based on approximations, while the average number for all ages is accurate.
These figures were for 2012. Between 2012 and 2014, the national expenditure on education increased from NIS 78.2 billion to NIS 86.4 billion, an increase of 10.5%. At the same time, the number of students increased from 2,027,360 to 2,131,521, an increase of about 5%. Taking into account the increase in the number of students, and the larger increase in expenditure, this is an addition of slightly over 5% in expenditure per child.
If we assume that the distribution of expenditures for the age groups and the various sections did not change in percentages, the monthly expenditure for education in 2014 was:

Monthly expenses per student (average for all ages): NIS 2,609.

Monthly expenditure per preschool student (kindergarten): NIS 1,772.

Monthly expenditure per elementary student (grades 16): NIS 2,747.

Monthly expenditure per secondary student (grades 712): NIS 2,985.
The main advantage of the voucher method is to improve the quality of education by reducing the number of students in the classroom, and more than that, by obtaining higher quality teachers through the creation of healthy competition for teaching jobs. To create competition for jobs, you need an incentive, and the main incentive is pay.
Today, there are 29 students in the class on average, and teachers’ salaries are low.
Let us suppose that 70% of the expenditure of an elementary school will be invested in teachers’ salaries, and the rest will be spent on expenses.
Let us suppose a teacher also teaches in class three out of every four hours that school is in session, meaning there are four teachers for every three classes.
Thus, if we remove the nonwage monthly expenditure per student from consideration, an elementary school teacher in 2014 could earn a gross monthly salary of NIS 41,823, and a secondary school teacher could earn a gross monthly salary of NIS 45,446.
Since the voucher system will give freedom of choice to the parents of the students, a school that does not make a real effort to attract customers, that is to say, the parents of the students, will simply lose these parents to another school that will. It can be assumed that the teachers will make every effort to improve teaching, first and foremost by reducing the number of students in the classes – by increasing the number of teachers, even though this will cause a reduction in their salary (but this is better than a school without students and without a salary). Let us suppose that in the first stage, the school will lower the number of students in each class from 29 (the average today) to only 22 students per class. According to the above assumptions, in this case, a teacher in an elementary school would earn NIS 31,728 gross and a teacher in a secondary school would earn 34,476 gross.
These two levels of salary are much higher than the average wage in hightech (NIS 23,800 gross in 2015, source: Globes), which is what will attract excellent teaching staff to the education system and create healthy competition for every teaching position, anywhere in Israel. And all this without adding a single shekel to the education budget. On the contrary, with such teachers' salary levels, it is even possible to reduce the current huge expenditure on education and still remain in a situation where everyone is satisfied.
A final note: In the beginning, even with the incentive of such a high salary, the teachers will not be able to reduce the number of students in the classes below a certain number because there will not yet be enough available teachers. But if we allow the process time to reach its full potential, and if we assume that the government will not cut the education budget in favor of other tax cuts (for example, although it is clear from these numbers that billions can be cut in education without damage, simply by changing the system), then we can reach the next result:
According to the data presented here, if after the shift to the voucher system, the teachers in the schools gradually reduce the number of students in the classes and at the same time have to lower their wages until the teachers’ salaries are equal to the average wage in hightech today, the number of pupils in an elementary school class will be 16 and a half pupils, and at the secondary (high school) level, there will be 15 students per class.
We do not say that’s exactly how it will be. The government may decide that an average of 20 students per class is an excellent achievement, then cut billions from the education budget without hurting the educational level, and the difference will be reduced in favor of tax cuts. And it is possible that teachers will not earn the same as those in hightech, so that the number of students in the class will drop even below 15. The point is that all this can happen thanks to one change: giving parents real freedom to decide where their children will learn.
Source List

“National Expenditure on Education, by Type of Expenditure and Level of Education and by Operating Sector and Financing Sector” (Central Bureau of Statistics (CBS)).

“National Expenditure on Education: 20122012” (CBS).

“The Education System  General Data” (Knesset website) [only the data on the total number of students].
“That’s what they earn in Israeli hightech” (Globes 9.7.15) [only the data on average wages in hightech].