FOCJ as Model for Financing the Estonian General Education

The share of GDP used for financing education in Estonia is somewhat lower in comparison to the EU average, the nominal amount of per capita education funds is much more lower due to a low level of economic development. Moreover, because of thin population per square km many small schools exist in Estonia without a sufficient number of pupils, which makes the education system more costly. We consider two different basic strategies to improve the situation.The current strategy of financing Estonian general education refers mainly to the prevailing educational and spatial organization. This strategy is not based on a fair equal treatment of cases. Therefore a new strategy of improvement of education financing system is discussed. It is based on the idea of Functional Overlapping Competitive Jurisdictions (FOCJ). The municipalities voluntarily form FOCJ that are operating schools. In this way municipalities may form a school jurisdiction that can negotiate with central government institutions for the loan and the school equipment etc. A municipality can act individually or the FOCJ negotiates for the municipal members in total. Theories of FOCJ-establishment, FOCJ-contribution determination and FOCJ-negotiations with central government are demonstrated. The FOCJ can supplement positively the first strategy of reform