This article examines the efficiency and equity of Israel’s school resource allocation. The analysis presented herein is twofold: (a) an analysis of the allocation mechanisms, using a taxonomy developed in this study and utilizing data gathered from reports of the budget department
of the Israeli Ministry of Education and publications of the chief scientists of education; and of (b) an analysis of the funding formulas, using path analysis and multivariate regressions and utilizing large scale, nationwide Israeli data sets relating students’ achievement to students’
background, teacher profiles, school characteristics and school budgets. The study reveals several shortcomings in the current allocation mechanisms to schools, as well as deficiencies in the funding formulas at all schooling levels. Specifically, the funding formula used for high schools
was found regressive in the sense that its design actually contributes to enlarging the achievement gap. Furthermore, the allocation mechanisms for middle and primary schools were found to discourage equity. All schooling levels mechanisms were found inefficient as neither design aligns with
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