Public education spending on education covers a significant portion of the government’s annual budget in Nepal. Despite being one of the major priority sectors of the government, national statistics shows that public education has fallen to its lowest in the recent years, depicting the increasing gap between educational performance of the community schools and their institutional counterparts. This, merged with the fact that an increasing amount of government budget is being allocated in public education every year, it becomes imperative to question the efficacy of current model of financing public education and demands for its revision.
Thus, this paper analyses the current system of financing public education and identifies some of the major problems. Firstly, this paper, apart from the government, has identified various other sources through which public education is financed in order to present a clear figure of total funds that goes into public education. Secondly, the paper has presented cost that goes into educating a child in both public and private schools, and has attempted to make comparative analysis. While accounting for the performance of the community schools, we have come to the conclusion that the cost of education in both community and institutional schools are very close to each other. Thirdly, as the basic education, now lies under the prerogative of local government, the paper has highlighted, various opportunities and challenges that local government can come across during the legislation and administration of basic education.
Finally, on the basis of these three aspects and study of international practices, the paper has come up with some policy implications that could help to enhance the effectiveness of public education financing in Nepal.