Decentralization and Social Policy in Brazil: An Analysis of Health and Education Policies of the New Republic
Tuesday, April 23rd, 2013
Two decades of highly centralized military rule in Brazil created demand for local autonomy. Transitioning from a military dictatorship to a federal presidential republic in 1985, Brazil sought to decentralize government authority and promote citizen participation to establish democracy. Simultaneously, Brazil struggled to overcome adverse economic circumstances including hyperinflation, extreme income inequality, limited human capital, and flagging performance of import-substituting industrialization. Meanwhile, serious social challenges included high rates of illiteracy, poverty, infant and maternal mortality, violent crime, and limited access to basic sanitation.
Within this context, both health policy and basic education policy emerged as critical components to address the social needs of the new republic. The improvement of Brazil’s adult literacy rate, from 75 to 90 percent in the past two decades, provides evidence of the broad impact of success in education policy.[i] The country has also achieved universal primary enrollment, and the percentage of primary and secondary students who are delayed in school has been cut in half.[ii] Similarly, Brazilian health policy touts its own substantial achievements over the same period. The infant and maternal mortality rates both decreased by 50 percent, life expectancy increased from sixty-four to seventy-three years, and universal immunization was reached for most major diseases.[iii]
The nation achieved these successes while learning how to negotiate the challenges of implementing federalism and finding not only the preferable but also the optimal mix of decentralized authority and finances in each policy arena. Although decentralization was a prominent concept in Brazil at the time, consensus over its implementation did not exist either among or within policy arenas.[iv] As a result, significant differences arose in the nature of the application of decentralization to health and education policies. These differences contributed to particular challenges and successes in each sector over the following decades. The lessons learned to date from each arena can benefit the other in order to create a stronger, more cohesive overall social policy.
Decentralization Process in Brief
Brazil became a decentralized federation when it undertook a dramatic transformation of governance following the peaceful demise of an authoritarian military regime.[v] The strong reaction against centralized government and the relative strength of the states vis-à-vis the nascent federal government, which was facing daunting economic challenges, generated tremendous pressure to devolve responsibilities and resources to subnational units.[vi] As a result, regional interests in maintaining discretion over finances, administration, and implementation responsibilities dominated constitutional deliberations.[vii]
The Federal Constitution of 1988 emphasized universal rights-based welfare, democratization, professionalization of public management, creation of municipal public services, and federal cooperation to reduce regional inequalities.[viii] It enshrined substantial roles for Brazil’s current twenty-six states and more than 5,500 municipalities, including the provision of primary and secondary education and primary health care.[ix] Brazil’s Constitution of 1891 also attributed a responsibility for states to provide both health and education services, though this did not become universalized and decentralized until the birth of the new republic.[x] Although the federal government failed to elaborate a coherent social-policy framework during the early years of the new republic, the constitutionally mandated direct elections of state governors and municipal mayors encouraged attention to social policy matters.[xi]
Decentralization was intended to create space for autonomy, innovation, and efficiency at each level, especially for local governments. However, the process of decentralizing authority was quite disorderly.[xii] When negotiations existed between states and municipalities regarding jurisdiction and delivery of services, states used their dominant political positions to secure the most favorable terms. Both subnational levels of government were also able to obtain financial resources and fiscal insurance from the federal government with virtually no fiscal responsibility.[xiii] Consequently, subnational units often ran large fiscal deficits until budget reforms were implemented in 2000.[xiv]
However, widespread lack of follow-through and accountability among these lower units of government accompanied the rapid devolution of finances and responsibility. Varying capacities for revenue generation also exacerbated regional inequalities. In fact, local governments and poor states relied heavily on transfers from the federal government to provide services and meet their obligations.[xv] This scenario resulted in a resurgence of the role of the federal government in defining roles and restricting the use of public funds during the mid- to late 1990s under the Cardoso government—a trend that has continued to date.[xvi]
Decentralization of Health Policy
Demands for the transformation of the provision of health care strengthened the decentralization of the democratic transition.[xvii] Discussions of the need for a unified, universal health care system began in the 1970s with the Sanitarista social movement spearheaded by health professionals.[xviii] Public health care administrated and delivered by the Social Security Agency (INAMPS) existed at the time, but it only covered formal-sector workers making payroll contributions to social security. Private providers served the majority of clients and curative care was predominant, although the Ministry of Health provided some preventive care.[xix]
The objectives of the Sanitarista movement included universalizing the public system to include poor and informal workers, reducing the costs of curative care by emphasizing preventive and primary care, and reducing excessive reliance on private health care. The movement viewed decentralization as a move toward efficiency and a dilution of private sector influence on public policy. One year prior to adoption of the constitution, the movement succeeded in lobbying for the approval of the Unified and Decentralized Healthcare System (SUDS), a system that included much of the reform agenda.[xx]
The 1988 constitution formalized the universal right to free healthcare and created the Unified Health System (SUS). This pivotal moment in Brazilian history crystallized a commitment to decentralization and universalization of health care. The Ministries of Health and Social Security were merged, which eliminated the divide between preventive and curative care, and states and municipalities were given authority to provide services and receive Federal transfers.[xxi]
The exact structure of the decentralized Health Care system was not established for several years. In fact, a centralized hierarchy initially emerged in which the Federal Ministry of Health wielded significant authority over the lower levels of government representing a continuation of past policy. The adoption of two National Health Laws in 1990 actually implemented the SUS and began the transfer of Social Security contributions to municipalities, but the Ministry of Health retained financing and planning responsibilities causing extensive local government dependency.[xxii] The Ministry of Health only authorized automatic transfers to cover actual services provided; facility maintenance costs were covered on a negotiated basis. To the extent that state governors were inclined, states helped fund personnel and other facility costs.[xxiii] The introduction of Basic Operating Norms (NOB) in 1991 and 1993 further defined the roles of each entity with the latter NOB serving to finally implement the decentralizing intentions of the constitution.
The 1993 NOB outlined differentiated levels of responsibility for services that local and state governments could adopt that would trigger the transfer of funds, although automatic transfer would only occur at the highest level for each.[xxiv] This created a significant incentive for governments to develop the capacity for more extensive services, but by 1996, only 144 municipalities out of over 5,000 had adopted the highest level of service.[xxv]
The most enduring measure included in the 1993 NOB was the institutionalization of the Tripartite Intergovernmental Commission (CIT) and Bipartite Intergovernmental Commissions (CIB), which were planning and coordination forums between federal, state, and local governments; and state and local governments, respectively. These commissions, in addition to subsequent local health councils and regional management groups, strengthened the decentralized provision of services by promoting deliberation and negotiation of roles and challenges.[xxvi]
Yet, the system’s weakness continued to be a lack of dedicated funding as exemplified by the social-security fund’s refusal to make payments and its subsequent abandonment of SUS.[xxvii] Municipal governments were encouraged, but not statutorily required, to devote portions of their budgets to health services; this did not always occur.[xxviii]
The 1996 NOB and other reforms adopted by the Cardoso administration prioritized the financing of health policy and the stimulation of subnational governments to actually provide services. The first earmarked health care revenues arose from a tax on financial transactions, but a reduction of contributions from other ministries quickly offset the increased revenue from the tax.[xxix] In 2000, Constitutional Amendment 29 required dedicated funding for health care by all three levels of government and, significantly, marked the first initiative by the national legislature to reform health care.[xxx]
By 2001, all municipalities had adopted the provision of public health care, although only 10 percent operated at the highest level of responsibility. Additionally, two major community health programs—the Health Community Agents Program and the Family Health Program—were adopted to further expand the reach of primary and preventive care by utilizing medical outreach teams. Notably, the most significant health policy changes to occur during the administration of President Luiz Inácio Lula da Silva were the Health Pact of 2006, which further strengthened regional coordination, and the elimination of the dedicated financial services tax.[xxxi]
The lengthy, but ultimately successful, decentralization process of Brazil’s health policy was fraught with adversity, but today the public system provides, finances, manages, and regulates a full range of health services with substantial collaboration between all three levels of government.[xxxii] Gaps in services and quality still exist across the federation, stable funding streams remain elusive, and expenditures are still closely tied to population counts rather than level of need.[xxxiii] However, the impressive system of horizontal and vertical collaboration allows governments to address needs in a more coordinated fashion, while strengthening democratic participation. This alone is a remarkable achievement for twenty-five years of work in the fifth-largest country in the world.
Decentralization of Education Policy
Brazil’s education policy has evolved extraordinarily since 1985. Like health policy, the Federal Constitution of 1988 decentralized and universalized education. However, unlike health care, top-down advocacy from Ministers of Education, government executives, and international finance institutions prompted the decentralization of education.[xxxiv] The lack of an organized social movement driving the reform produced a different decentralization mix, which emphasized flexible financing rather than service provision or quality. One important consequence was that legislation stipulated dedicated tax revenues for each level of government, in addition to federal transfers to subnational units.[xxxv]
Consistent with the reorganization occurring throughout the country, states and municipalities negotiated—or attempted unsuccessfully to negotiate—their roles in education provision over the course of a decade following adoption of the constitution. This occurred in a highly disorganized fashion, but in most cases municipalities retained operational responsibility for primary schools, and states continued providing services at both primary and secondary levels. The Federal Government was responsible for providing funds; establishing educational norms; conducting performance evaluation; and operating some primary schools, secondary schools, and nearly all tertiary—university—schools.[xxxvi]
The Ten-Year Education for All Plan of 1993 reiterated Brazil’s commitment to providing universal access to education, but also recognized a role for intergovernmental collaboration and civil society in addressing Brazil’s educational needs.[xxxvii] In 1994, a decentralized school lunch program and the dissolution and subsequent reorganization of the corrupt Federal Council on Education bolstered local capacity to meet the needs of poor students and strengthened confidence in federal planning.[xxxviii]
In the author’s opinion, the most significant education policies to follow were the introduction of the National Education Guidelines and Framework Law (LDB) and a National Fund for Primary Education Development (FUNDEF), which coincided with a greater centralization of social policy in the mid-1990s. The LDB sought to address regional disparities in administration and quality by establishing national standards regarding common curricula, number of hours and days of instruction, performance evaluations, and inclusion of indigenous ethnic groups.[xxxix] That same year, Constitutional Amendment 14 created FUNDEF to ensure a sound financial base for the universalization of access to primary school.
The Federal Government utilized FUNDEF to firmly assert its role in education by stipulating minimum per-pupil expenditures, directing funds to primary schools, redistributing taxes to poorer regions, and linking funds to enrollment rates.[xl] The ensuing competition between local and state governments to enroll students in their schools succeeded at universalizing primary education within a few years, but it also underscored the lack of intergovernmental collaboration.[xli] Interestingly, the policy created more atomized decentralization with significant strings attached to the Federal Government by promoting greater school autonomy, school councils, and transition municipal education planning.[xlii]
FUNDEF’s success at achieving universal primary enrollment led to its expansion to pre-primary and secondary school in the form of Constitutional Amendment 53 that created the Fund for the Maintenance and Development of Basic Education (FUNDEB) in 2006.[xliii] Yet, some of Brazil’s most impactful education policies have been with regard to accountability to achieve results via a series of federally-mandated exams in addition to participation in the Program for International Student Assessment (PISA) tests beginning in 2000. These measures have raised the profile of poorly performing schools and contributed to more concerted political action in the past decade.[xliv]
Brazil’s commitment to education policy and its particular decentralization mix has resulted in a fiscal outlay of 5.7 percent of GDP, one of the highest in the world.[xlv] Constitutional Amendment 59 further increased funding while extending compulsory education to a total of fourteen years and called for the establishment of a collaborative framework between all three levels of government.[xlvi] The National Education Plan of 2011 outlines impressive objectives such as universal literacy, universal education from pre-primary through secondary, and a funding target of 7 percent of GDP.[xlvii] However, a disproportionate amount of public funding has traditionally supported higher education, and many public funds have been lost due to corruption.[xlviii] The 2011 plan places stronger emphasis on pre-school and basic education funding, which will benefit subnational governments and enable them to fulfill their constitutional mandates more effectively.
Perhaps the daunting task of managing a local health care system that included private providers motivated some of the collaborative initiatives found in the Brazilian health care policy. These joint efforts have enabled governments and private providers to coordinate and improve services while simultaneously strengthening autonomy and interdependence.[xlix]
With amendment 59, the education sector seems poised to engage in a similar effort that would reduce the current competitive environment between and among states and municipalities. As implementation plans are developed, leaders might benefit from emulating the health sector’s vertical and horizontal cooperation. One challenge in doing so may be that the nature of education is such that leaders must be willing to commit to long-term strategies even when presented with discouraging short-term results.[l] In other words, partners will need patience.
Education policy may have benefitted from its origins as a top-down reform in Brazil. The political commitment to education ensured that, if nothing else, money would be available. Multiple dedicated funding sources for all three levels of government have been stable over time and supplemented by various special funds. In contrast, funding has been the health sector’s chronic ailment.
Health care advocates and the numerous commissions and councils that comprise the system may need a new Sanitarista movement to secure their funding base, but they also need advocates in the executive offices of each level of government. The comparable flexibility and redistributive nature of education funding would also help the health care sector address the disparities in coverage and service quality. Another lesson from the education sector is that the discovery and publication of astoundingly poor international and inter-regional comparisons can prompt citizens to pay attention and public officials to act.
The development paths of Brazil’s health and education policies were decidedly distinct from the beginning of the new republic. An organic social movement prompted the decentralization of health policy, while education ministers and government executives drove the process of decentralizing education. Although a common critique of decentralization is that progress can be slow and consensus difficult to achieve, it may be possible to accelerate social policy achievements if each sector can learn from the best practices of the other.