Lula sends R$20 billion for secondary education outside the framework – 11/28/2023 – Education

The Lula (PT) government decided to issue an MP (provisional measure) that creates a private scholarship financing fund to encourage poor students to remain in secondary education.

The fund will receive up to R$20 billion from the Union, in resources from the Budget or shares in state-owned companies. In the future, pre-salt auctions may also require companies to make additional contributions to the fund as social compensation.

The MP is expected to be published in the Official Gazette of the Union this Tuesday (28).

The government’s plan is, starting next year, to pay a scholarship so that poor young people do not drop out of school. Students will be able to receive an amount each month and also withdraw a portion, which will remain in a savings account, at the end of the school year.

The program will be aimed at young people from families registered in the Single Registry, the gateway to social programs, and will give priority to families with a per capita income of up to R$218.00.

Because the fund is private, the use of resources would be outside the fiscal rules after contributions from the Union. But doubts remain about how the transfers will be classified within the rules of the new fiscal framework.

The injection of resources through shares in state-owned companies, for example, would be outside the spending limit and also outside the primary result accounting, since it is a financial expense.

The expedient was already used at the end of Lula’s second term and during the Dilma Rousseff (PT) government, when shares from Petrobras, Eletrobras and public banks were used to capitalize the Fies guarantee fund — which later needed new contributions to cover to the increase in student loan defaults. In a 2015 report, the fund’s management pointed out the low liquidity of some shares as an obstacle to honoring any commitments.

The creation of the program to encourage retention in secondary education had already been announced, but members of the government, such as the Minister of Education, Camilo Santana, indicated that there was uncertainty about implementing it through a bill or MP. There was also no final decision on the composition of a specific fund for this.

Details about scholarship values, payment methods and operation of the program will be stipulated in another legal text, to be edited by the Ministries of Education and Finance. There will be compensation for beneficiaries, such as attendance, approval and participation in exams, such as Saeb (federal assessment of basic education) and Enem, in the case of 3rd year students.

The volume of the Union’s contribution for 2024 has yet to be defined. This involves internal negotiation within the government.

“For the purposes of evaluating the budgetary impact, it is important to highlight that the definition of savings values ​​per student and the scope of the proposal in terms of public is conditioned on the payment of quotas, being limited to the ceiling of R$ 20 billion, in the case of Union”, says statement of reasons, obtained by Sheet.

“As the payment of quotas by the Union is conditional on budgetary availability in the aforementioned private fund, the provisional measure determines that values, payment methods and criteria for the operationalization and use of savings will be defined later in an act by the Ministers of State for Education and Finance. “

This involves the creation of a private fund of Caixa Econômica Federal with the participation of the Union and other shareholders, individuals or legal entities, under public or private law. It is still expected that states and municipalities will be able to make contributions.

The contributions from the “sales of oil, natural gas and other fluid hydrocarbons in the Union” will be linked to resources from auctions that enter from 2025 onwards.

It is expected, according to documents obtained by the report, that the payment of quotas by the Union will be authorized by an act of the Minister of State for Finance and may be carried out through: shares of companies in which it has a minority stake, shares of federal mixed capital companies exceeding what is necessary to maintain its shareholding control or direct contribution from the Union, as provided for in the Annual Budget Law.

Secondary education represents one of the biggest bottlenecks in Brazilian education. Dropout rates are concentrated among the poorest, and research shows that many young people leave school to work. The dropout rate is 8.8% in the first year of high school, according to official data.

The MEC has already announced initiatives aimed at literacy and the expansion of full-time schools. In both cases, the government is failing to get the money to education networks and schools — not a single cent of the R$1 billion planned this year for a new literacy program had been committed by mid-November, as the Sheet showed.

The creation of a federal scholarship program in secondary education was a commitment made by the then candidate for Palácio do Planalto, Simone Tebet. Before announcing her support for Lula, she made it a condition to incorporate this promise into the PT government program. Today Tebet is Minister of Planning. There are already successful initiatives in some states, such as Alagoas.

A provisional measure becomes valid as soon as it is issued, but it needs to be assessed by the National Congress. The objective of starting the program in 2024 is placed as an argument for urgency for the act, which is one of the criteria for issuing a provisional measure.

Last week, members of the government had already admitted to funding a program to encourage students to remain in high school outside the current spending limit, since the reallocation of resources in the Budget is considered something non-trivial. The Executive currently lives with a block of R$5 billion in expenses to precisely avoid exceeding the 2023 spending limit.

As shown by Sheet, the government attempted a maneuver in Congress to free a contribution in 2023 from the spending limit in force this year, but ran into resistance from the opposition. Guaranteeing the transfer this year worsens the picture of public accounts in 2023, but has the advantage of avoiding further worsening in the coming years.