COST-BENEFIT AND SOCIAL
RETURN ON INVESTMENT
ANALYSIS OF COMMUNITY-BASED
SELF-HELP PRE-SCHOOL
EDUCATION MODEL TO STATE
KINDERGARTEN MODEL
AND
SUGGESTION ON SUSTAINABLE
BUSINESS CASE
UNITED AID FOR AZERBAIJAN AND CENTRE FOR
INNOVATIONs IN EDUCATION
Prepared by JamilAkhundov, PrincepsLegem MMC
BAKU, AZERBAIJAN
Edited by Gwen Burchell, Centre for Social Policy Development
August, 2013
Alternative Model of Pre-School Education
Table of Contents
1. INTRODUCTION .............................................................................................................................................. 3
2. COST-BENEFIT AND SOCIAL RETURN ON INVESTMENT ANALYSIS OF COMMUNITYBASED SELF-HELP PRE-SCHOOL EDUCATION MODEL TO STATE KINDERGARTEN
MODEL..................................................................................................................................................................... 6
2.1. COST OF STATE KINDERGARTEN MODEL ...................................................................................................... 6
2.2. SELF-HELP GROUP COST CALCULATIONS ..................................................................................................... 8
3. CONCLUSIONS, RESULTS AND SUSTAINABILITY PROPOSAL ..................................................... 14
2
Alternative Model of Pre-School Education
1. INTRODUCTION
Investments in education generate social and economic returns that strengthen a
country. The high- skills economy of the future needs an educated workforce.
Educated workforce contributes towards technological development, productivity
gains, entrepreneurial activity and overall economic competitiveness. The most
critical foundation of the proper education is established at pre-school level.
Well-designed preschool education programs producelong-termimprovements in
school success, including higher achievement testscores, lower rates of grade
repetition and specialeducation, and highereducational attainment. Some preschool
programs arealso associatedwith reduced delinquency and crime in childhood and
adulthood.
The long-term return of investment of proper education is not only at the level of
economic benefits that individual contributes throughout his active life-time, but
also at the level of reducing crime, anti-social behaviour and encouraging inclusive
and civil society. ‘There are sensitive periods in the early years in which the neural
patheways that are important in brain function, connecting the different parts of the
brain and the body, develop. This explains why the early years of experience and
brain and biological development can set trajectories in health, behaviour and
learning that last throughout the life cycle. It is difficult to change many of these
neurological pathways in the later stages of life.’ 1
Countries like Japan, South Korea, Singapore, Scandinavian countries, the US and
France have substantially improved their country’s competitiveness through heavy
investment in pre-school education.
In Azerbaijan, many communities do not provide pre-school education. Yet studies
show that the earlier a child begins an education the greater are chances for future
success. Physical space is currently filled to capacity for the nation’s children ages 3
to 6, and this meets only 23% of this age-group. Lack of pre-school slows the
development of these children and puts them at a disadvantage when they begin
their formal schooling. (UNICEF). The 2009 Education Law refers to the choice of
families to educate their children at home but under the condition of technical
support from local authorities. However, no methodology has been put in place to
achieve this so most children are at home without any pre-school support and
limited parental involvement.
United Aid for Azerbaijan (UAFA) together with Centre for Innovations in
Education (CIE) are Non-governmental Organisations that were piloting the
development of cost-effective model of pre-school education, centred around SelfHelp Groups (SHG). The aim of this report is to provide an overview of cost-benefit
1
'Early Child Development from Measurement to Action' ed. Mary Eming Young with Linda M. Richardson,
World Bank
3
Alternative Model of Pre-School Education
analysis of SHG model, compared to traditional state-owned kindergarten model.
We will also attempts to provide a model for the project’s long-term sustainability.
4
Alternative Model of Pre-School Education
MODEL OUTLINE
Increasing Access to Pre-School: Bilisuvar, Lenkoran, Sumquait, Siyazin (16 districts)
 In 2012,only 23 % of urban children and 8 % of rural children had access to pre-school
education facilities in Azerbaijan
 Nationwide only 17 % of communities have kindergartens available within acceptable distance
 Ratio of kindergartens:children in 2012 is 1:600, following a teacher-centered model
Aim of Model
An alternative, low-cost model of pre-school education that meets the needs of children excluded
from kindergarten system because of poverty, rural location and disability.
Child-centered models are more suited to the changing economic environment in Azerbaijan,
because they encourage self-motivation, communication and active learning.
Through State & Civil Society Cooperation
 Local government: Executive Committee/Municipalities provided venue for pre-school activities
and support public awareness campaigns with local education, health and social protection
departments
 Existing kindergartens form a ‘hub’ to support development of pre-school activities in
communities and villages which have high numbers of children but no kindergartens
 Local community:
 Self-Help Groups (SHG) of 20 – 25parents are formed, to voluntarily manage pre-school
activities in their own community
 Parents trained in Early Childhood Development methodology, Normative Child Development,
Portage, Early Intervention, Parenting Skills, Disability Awareness, Stigma and Equality,
Leadership, Children’s Rights
Supervisory Hub
 1 kindergarten methodologist supervises 4 SHGS in local region
 Methodologist given training in child-centered methodologies and hub management
 Methodologist visits each SHG once per week to monitor activities and give feedback
Activities
Children attend center for 4 hours/week by age group; centres are open every day
Children with disabilities integrate to society
Parents learn new parenting skills, and promote civic responsibility through volunteerism
Modern methods of early childhood development used - strong emphasis on learning through
play
 Children in Azerbaijan are given a head start to become productive members of the society




5
Alternative Model of Pre-School Education
2.
COST-BENEFIT
AND
SOCIAL
RETURN
ON
INVESTMENT ANALYSIS OF COMMUNITY-BASED SELFHELP
PRE-SCHOOL
EDUCATION
MODEL
TO
PUBLICKINDERGARTEN MODEL
2.1.Cost of Public Kindergarten Model
Currently, there are 1,666 (State & private) preschool education institutions
operating in Azerbaijan that comprise 113,517 children2. Moreover, 4 kindergartens
for disabled children, 22 special study groups at 13 general preschool
establishments, 5 preschool sanatoriums and 38 private preschool institutions that
received a licence from the Ministry of Education operate in the Republic (Source:
Ministry of Education).The number of children attracted to preschool education
institutions in Azerbaijan is composed of 16% (in the cities 23.4%, in villages 8.6%).
The cost for establishing a kindergarten is difficult to measure and depends largely
on kindergarten size and location. Table 1demonstrates a theoretical estimate for
construction and set-up costs for public kindergarten based on average market rates
for real estate and out-of-town land (excludes Baku as prices for land will be higher).
Hence, average set-up cost per child is around AZN3,140/child.
Table 1: Theoretical capital cost estimate for establishing a kindergarten for 100
children
Item
AZN
Land
39,245
Comment
Market-based estimate for 1ha of land in out-of-town urban
locations
Constructioncost
156,980
Market-based estimate for a premise of 300-400 m2
Renovationcost
31,396
Market-basedestimate3
Costofequipment
15,698
Market-basedestimate
Costforstationary
7,849
Market-basedestimate
Taxes, Permits, Other
54,943
Other costs related permits and some other official costs
Contingency
7,849
Market-basedestimate
Total
Costperchild
313,959
3,140
Source: Team estimates, interviews, market observations
2
3
State Statistics Committee, 2012
200-500/sq.m
6
Alternative Model of Pre-School Education
State-owned public kindergartens also incur number of running costs, including
salaries, insurance and some other. Table 2 provides estimates for operating
expenditure on annual basis.
Table 2: Operating expenditure calculation for public kindergarten of 20 children
in Azerbaijan per year
Indicators
Cost (AZN)
1
StaffSalary
211100
8,082
2
Allocations to Social Protection Fund
212100
1,778
3
Compulsorystateinsurance
212200
4
Stationaryandhousingcost
221100
5
Printingcost
221200
6
Administrativecost
221310
7
Currentrepair
221320
8
Electricitycost
224100
1,500
9
Fuelandgascost
224200
500
10
Reimbursementofwatercost
224300
1,600
11
Reimbursement of heat (fuel) cost
224400
2,000
12
Reimbursementofseweragecosts
224500
400
13
Reimbursement of other service expenses
224600
200
14
Public utilities and communication costs
224700
100
15
224810
50
225100
500
17
Reimbursement of domestic phone calls
Purchase of medicinal and dressing utensils and
materials
Bedroomaccessories (20 children)
225200
1,200
18
Purchaseoffood
225300
18,000
19
Purchaseofassets
225411
4,500
20
Purchaseofequipment
225412
1,500
21
Otherpurchasesandservices
225413
1,100
22
Banking (transaction) cost
282300
40
23
Otherequipment
311220
2,500
24
TotalCost
Annual
46,550
16
Costperchild
Source: Interviews with Ministry of Education and other public officials
7
Budgetline
500
500
2,328
Alternative Model of Pre-School Education
Table 3: Average monthly salaries for state kindergartens
Monthly Staff Salary for Public Kindergarten per 20 children
№
1
2
3
4
5
6
7
Staff
Director
Pedagogue
Physical Therapist
Cook
Maid
Guard
Janitor
Total monthly cost
Annual cost
Annual cost per child
Qualification by
degree
13
11
10
5
4
2
3
Full time/
Part time
1
1
0.25
1
1
1
0.25
Monthly
Salary
150
143
143
113
108
98
103
Total
(AZN)
150
143
35.75
113
108
98
25.75
673.5
8082.0
404.1
Source: Interviews with Ministry of Education and other public officials
Hence average running cost per child is AZN404 per year.
2.2. Self-Help Group Cost Calculations
Self-Help Groups (SHG) are easy to establish. They should not require much upfront investment because the purpose is to empower a local community to
voluntarily support the activity on behalf of the children in their community.
A small premise to host 3-4 hours per day is required. Depending on circumstances
and based on UAFA/CIE experience, such premises exist on the balance of each
municipality and rural administration unit and could be provided for free. Review
of average upfront capital costs are presented in Table 4.
Table 4: Estimated upfront cost for setting up SHG facility for approx. 20 children
Item
Premise
AZN
0
Comment
Provided for free by municipality
Renovation cost
1,000
Simple renovation work to make suitable for children
Cost of equipment, furniture
1,500
Simple required equipment, based on experience
Cost for education materials
350
Market-based estimate
Contingency
150
Any unexpected expenditure
Total
Cost per child
8
3,000
150
Alternative Model of Pre-School Education
Source: Team estimates, interviews, market observations
Hence, upfront capital cost for setting up a SHG for 20 children is AZN150/child.
Key assumption here includes that premises will be provided by municipalities for
free. In case of rent, the cost could increase. In emergency cases when premises are
not available in the community, SHGs can be located in the house of one of the
parent members.
In addition, when establishing SHGs preparation goes through certain stages for
which UAFA/CIE have developed specific methodology, training material and
know-how, including
- Stage1: Mobilisation Stage
- Stage 2: Training Stage for SHGs
- Stage 3: Training for Pre-School activities (for management)
- Stage 4: On-going Mentoring activities
Usually 1 hub kindergarten monitors activities of 4-5 SHGs. Hence one hub could
cover around 100 children.
Stages 1,2 and 3 take place in the set-up phase. The costs include:
Table 5: Estimated Mobilisation Stage Costs – for one hub (100 children)
Actions
Days/weeks
No. ofstaff
Costperstaff
OtherCost
Total (AZN)
Community meeting
1 day meetings
1 day travel
2 seniorstaff
1 assistant
1 driver
100AZN/day
50AZN/day
50 AZN/day
Per diem @
15AZN/day
Petrol @
30AZN
700
Meetings with
Municipalities, visits to
municipalities,
kindergartens, families
Workshop with
polyclinic/medical staff
on Early Intervention
2 days meetings
1 day travel
1 day workshop
1 day travel
1 day workshop
1 day travel
3 days planning
1 day travel
2 seniorstaff
1 assistant
1 driver
100AZN/day
50AZN/day
50 AZN/day
1010
1 senior staff
1 junior staff
1 driver
100AZN/day
50AZN/day
50 AZN/day
1 seniorstaff
1 driver
100AZN/day
50AZN/day
2 seniorstaff
1 assistant
1 driver
100AZN/day
50AZN/day
50 AZN/day
Per diem @
15AZN/day
Petrol @
30AZN
Per diem @
15AZN/day
Petrol @
30AZN
Per diem @
15AZN/day
Petrol @
30AZN
Per diem @
15AZN/day
Petrol @
30AZN
Workshop with
kindergarten staff,
educators on ECD and IE
Planning meetings groups, venues,
methodologists, leaders
470
340
1320
Materials
200
Total
4040
Cost per child
Source: CIE/UAFA estimates
9
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Alternative Model of Pre-School Education
Table 6: Training Stage for SHGs - for one hub (100 children)
Actions
Days
No. ofstaff
Costperstaff
Early Childhood
development
4 days training
1 day - travel
1 senior
staff
1 junior
staff
1 driver
100AZN/day
50AZN/day
50 AZN/day
Disability
awareness
4 days training
1 day - travel
1 senior
staff
1 junior
staff
1 driver
100AZN/day
50AZN/day
50 AZN/day
Portage/ Child
rights
4 days training
1 day - travel
1 senior
staff
1 junior
staff
1 driver
100AZN/day
50AZN/day
50 AZN/day
Child centered
methodology
/Parenting skills
4 days training
1 day - travel
1 senior
staff
1 junior
staff
1 driver
100AZN/day
50AZN/day
50 AZN/day
Inclusive
education/How
to work with
children with
disability (CWD)
4 days training
1 day - travel
1 senior
staff
1 junior
staff
1 driver
100AZN/day
50AZN/day
50 AZN/day
Ongoing training
on child
development
2 days training
1 day - travel
1 senior
staff
1 junior
staff
1 driver
100AZN/day
50AZN/day
50 AZN/day
OtherCost
Per diem 35AZN/day
Refreshments 5AZN/day
Petrol @
30AZN
Per diem 35AZN/day
Refreshments 5AZN/day
Petrol @
30AZN
Per diem 35AZN/day
Refreshments 5AZN/day
Petrol @
30AZN
Per diem 35AZN/day
Refreshments 5AZN/day
Petrol @
30AZN
Per diem 35AZN/day
Refreshments 5AZN/day
Petrol @
30AZN
Per diem 35AZN/day
Refreshments 5AZN/day
Petrol @
30AZN
Total
(AZN)
1270
1270
1270
1270
1270
845
Materials
200
Total
7395
Cost per child
Source: CIE/UAFA estimates
10
74
Alternative Model of Pre-School Education
Table 7: Training for Pre-School Activities (Management) for one hub (100
children)
Actions
Days
No. ofstaff
Costperstaff
OtherCost
Total
(AZN)
225
Child centered
methodology
1 day training
1 seniorstaff
1 juniorstaff
100AZN/day
50AZN/day
Per diem 35AZN/day
Refreshments 5AZN/day
Creation of
learning
environment
1 day training
1 seniorstaff
1 juniorstaff
100AZN/day
50AZN/day
Per diem 35AZN/day
Refreshments 5AZN/day
225
Inclusive
education
1 day training
1 seniorstaff
1 juniorstaff
100AZN/day
50AZN/day
Per diem 35AZN/day
Refreshments 5AZN/day
225
Training of
Trainers for
Methodologists
1 day training
1 seniorstaff
1 juniorstaff
100AZN/day
50AZN/day
Per diem 35AZN/day
Refreshments 5AZN/day
225
Travel
2 day - travel
driver
50AZN/day
Per diem - 35
AZN/day
AZN30 for
petrol
200
Materials
200
Total
1300
Cost per child
13
Source: CIE/UAFA estimates
Based on the estimates above, the average cost to set-up 4 SHGs in one hub will be
around AZN127/child (calculated as (mobilisation stage cost + training stage cost +
training for pre-school activities)/100 children). Together with capital expenditure,
total upfront cost per child is around AZN277 (calculated as AZN150+ AZN127).
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Alternative Model of Pre-School Education
The Table 8 below describes monthly cost of running one hub of 4 SHG for 100
children. This is the point at which the low cost of this model proves to be a strong
alternative to kindergartens.
Table 8: Estimated monthly costs of running 1 hub/4 SHG for 100 children
Rate
(AZN)
#
Cost
(AZN)
1 Educational Materials
100
4
400
2 Leader salary
Indicators
50
4
200
salary4
120
1
120
4 Ongoing maintenance
Total per month
Cost per child
50
4
200
920
9.2
3 Methodologist
Source: Team estimates
This figure assumes that costs such as electricity, gas and other utilities are covered
by the municipality or local authority that is providing the venue. Per year, the total
running cost per child would be AZN110.4.
In addition, there will also be certain costs incurred to supervise and mentor SHGs
during the first two years. Table 9 will describe this in more detail.
Table 9: Estimated for ongoing mentoring/supervision costs for an one hub/4 SHG
for 100 children
Actions
Days
Assessment of
children in
participating
region
3 days assessment
1 day - travel
Support to form
SHG activity plan
for one year
2 days planning
1 day - travel
4
No. ofstaff
1 senior
staff
1 junior
staff
1 driver
1 senior
staff
1 junior
staff
1 driver
Cost per
staff
100AZN/day
50AZN/day
50 AZN/day
100AZN/day
50AZN/day
50 AZN/day
OtherCost
Per diem 35AZN/day
Refreshments 10AZN/day
Petrol - 30AZN
Per diem 35AZN/day
Refreshments 10AZN/day
Petrol - 30AZN
Total
(AZN)
990
730
Methodologists are paid by the Ministry of Education as a full-time staff member; in this model, we
recommend either that their scope of work and salary is expanded, or an extra methodologist per region is
recruited.
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Alternative Model of Pre-School Education
Design of
individual
education plan
for each child
2 days - design
1 day - travel
1 seniorstaff
1 driver
100AZN/day
50AZN/day
Supervision of
methodologists,
group activities phone calls,
monthly regional
visits
Cross visits to
share experience
8 days - visits
8 days - travel
2 seniorstaff
1 driver
100AZN/day
50AZN/day
3 days - travel
1 driver
50AZN/day
Per diem 35AZN/day
Refreshments 10AZN/day
Petrol - 30AZN
Per diem 35AZN/day
Refreshments 10AZN/day
Petrol - 30AZN
Per diem 35AZN/day
Refreshments 10AZN/day
Petrol - 30AZN
505
4270
180
Total – Annual
6675
Cost per child
66.75
Source: Team estimates
Hence, the running cost of a SHG per child per year for a SHG is around AZN177.15
(including AZN110.4 operating cost + AZN66.75 mentoring/supervision cost).
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Alternative Model of Pre-School Education
3. CONCLUSIONS, RESULTS AND SUSTAINABILITY
PROPOSAL
Please find below an analysis that provides an indication of financial and social costs and
benefits of Self-Help Group Model.
Table6: Cost-Benefit Analysis of SHG Model and State Kindergarten Model
Item
State Kindergarten Model
AZN
Self-Help Group Model
AZN
Building/equipping
3140
150
Mobilisation
n/a
40
Capitalcosts -
Training- SHG
Training education
n/a
13
Operatingcosts -
2328
110
Evaluation costs
n/a
67
Total - Year 1
5468
454
Total - Year 2
2328
177
Social Benefits
74
Larger penetration for population
Day-care family help
Parent involvement
Community involvement
Teaches guide parents on how to
best sustainably educate children
Quick set-up
Spill-overs related to teacher
training
Engages local government
Social Costs
Will take time to roll out
More expensive
Does not engage community
Does not engage parents
Source: Team estimates
Key Conclusions
-
14
SHG is less costly to set up and to run
SHG is quicker to roll-out
Takes time from parents from work
Alternative Model of Pre-School Education
-
Social return on investment is higher with SHG because of benefits related to
upgrading parent understanding of children’s education
Social return on investment is higher with SHG because of community
involvement and local government engagement
Social return on investment is higher with SHG because of benefits related to
higher children attainment than in state-run kindergarten system, according
to our observations
Sustainability of SHG model
Since SHG is relatively inexpensive to set-up and to run, there could be on-going
support sources for financing the expansion of the model. These could involve small
local donations, local government support (for instance with premises) and charging
parent small fee for SHG services.
We believe, once hub kindergartens are set-up and first pilot SHG are in place, its
benefits will be known by neighbouring communities and hence popularity will
grow and community will have higher willingness to contribute with a view to
seeing SHG set up in their area for the benefit of their children.
15