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CONDITIONAL CASH TRANSFERS IN BULGARIA

THE CASE OF CHILD ALLOWANCE

ZSOLT TEMESVÁRY

2013.

CASE STUDY PREPARED FOR TÁRKI

DECEMBER 2013.

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1. Social and policy context of the programme

Poverty

In the past decade poverty has steadily increased in Bulgaria, rising from 14 percent to 21

percent between 2001 and 2010. The spatial inequalities are quite significant, as the poorest

Western part of the country has gradually fallen behind the economically more developed

regions around the capital Sofia.

The country has distressing poverty indicators, especially with respect to those ones that refer

to the future life-chances of children. The poverty risk among households with dependent

children has been the highest in Bulgaria (47.7 percent in 2011) compared to other EU

member states, exceeding the poverty risk rates of Romania (43.5 percent) and Latvia (41.3

percent). However, despite the present unfavourable statistics, the Bulgarian government has

been able to decrease the poverty risk of families with children from 58.1 percent to 47.7

percent between 2003 and 2011. In households where two adults live with three or more

dependent children, the poverty risk is extremely high (84.8%). Single parents (mostly

mothers) also suffer from a significant poverty risk. The average poverty risk among them is

72.1 percent. The poverty rate among poor people whose income is under 60 percent of the

median income is 20.7 percent. This is the second highest poverty rate in the EU, only slightly

before Romania’s 21.1 percent (Eurostat 2013).

Unemployment among low skilled workers

Under-education generally leads to unemployment not only in Bulgaria but in the EU 27 as

well. Bulgaria’s average national unemployment rate was 12 percent in 2012; however,

unemployment rate among the low-skilled active population reached 30 percent in the same

year (Eurostat 2013). In Bulgaria, the proportion of job seekers with low qualification (30

percent) is significantly higher than the EU’s average rate (19 percent). One can see that while

the average unemployment rate is at around the EU’s level, unemployment rate of the low-

skilled workers significantly exceeds the EU average (by 11 percentage points). Early school

leave, combined with other disadvantages that accumulate through the educational system,

have negative implications for future job perspectives and quality of life. The recent economic

crisis has had particularly severe social consequences for employees with low qualifications,

as it has further worsened their already bad employment statistics. Compared to the year 2007

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before the beginning of the crisis, by 2012 the proportion of low-qualified workers had

increased in Bulgaria by 12.6 percentage points.

Average unemployment rate and unemployment rate among low-skilled workers in

Bulgaria and in the EU27 (2012)

*Eurostat employs ISCED 0-2 category for those workers whose qualification does not exceed the lower classes

of secondary school.

Source: Eurostat 2013.

Early school-leave in Bulgaria’s public education system

School drop-out rates in Bulgaria have stayed at the EU average. Looking at the past 10 years,

the country has been able to improve drop-out rates in the public education system by almost

ten percentage points. This improvement was particularly noticeable from 2003 to 2007, when

early school leave rates had decreased by 7 percentage points. Altogether, Bulgaria was able

to reduce its rather high drop-out rate from a high of 22 percent in 2003 to near 13 percent by

2012, just around the EU average. Girls’ drop-out rate (13%) was slightly higher than the rate

for boys (12.1%). It is also instructive to compare drop-out rates in the poorest regions to

national averages. There is positive correlation between the economic status of the region and

the rate of early school leave. Despite the fact that national drop-out rates have declined

significantly in the past decade, they have recently reached nearly 20 percent in the poorest

Severozapaden region. According to 2013 data, the deviation between drop-out rates

measured nation-wide and in the poorest region is rather high (7.5%). Girls’ drop-out

disadvantage is particularly significant in this region. While only 15 percent of the boys leave

public education early, a quarter (25.1 percent) of girls never finishes school.

0

5

10

15

20

25

30

35

EU27 BULGARIA

AVERAGE

LOW SKILLED

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Education measures

The Bulgarian government took some measures, in parallel with the transformation of the

child benefit system, to reform public education as a part of a comprehensive reform package

in 2008. The government raised teachers’ salaries by 22.5 percent and introduced a new

payment model that reflected on the performance of teachers. Schools are financed based on

the number of students in contrast with the earlier uniform financing practice. The reforms

helped poor children gain easier access to schools (free textbooks for children from grades 1-

7, school meals and transportation). Participation in public education is high in Bulgaria

compared to other countries in the region. Enrolment rate is as high as 97.8 percent at the

elementary school level, 78.3 percent in high schools and 73.2 percent in early-childhood

education. However, minority ethnic groups (particularly the Roma) suffer severe educational

inequalities in both access and quality.

Benefits relating to child allowance

Bulgaria spends around 1.3 percent of GDP on social assistance, compared to the 2.5 percent

average measured in the OECD countries. The two most important non-contributory benefits

are Guaranteed Minimum Income (GMI) and Heating Allowance. These two fundamental

allowance programmes are supplemented by other non-contributory and categorical in-cash

provisions: child protection benefits and benefits for people with disabilities. One-fifth of

households (19.6 percent) receive child protection benefits.

Bulgaria owns a rather comprehensive child protection system, including child welfare

services and benefits. Child allowance (CA) is only one aspect of this assistance network. The

Law on Child Benefits covers altogether 9 different transfers (benefits for children with

disabilities, benefits for twins, allowance for single mothers with children etc.). Most of them

are non-conditional. Poor families with infants (up to one year) receive an income-tested

monthly benefit for rearing children. The first time a child is enrolled to school, poor parents

receive a lump-sum benefit in order to compensate for the initial costs of education. Before

giving birth, mothers in need are eligible to a means-tested allowance that compensates them

for the loss of income. Parents whose children are between 3 and 6 years of age can receive a

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monthly benefit for their child, in case kindergarten service is not available in the region

where they live.

At the time of child birth, mothers receive a lump sum benefit to help cover the immediate

expenditures of child bearing. It makes up 250 BGN for the first child, and it significantly

increases up to 600 BGN for the second child’s birth. However, this birth grant fall back to

200 BGN for the third and further children. According to the children’s rights movements,

this measure is taken in order to encourage the bearing of the second child in middle class

families and discourage poor (and Roma) parents who would like to have more than two

children. Our ministerial representative confirmed that the government intends to support

middle-class families and motivate them to have more than one child. However, they do not

want to encourage parents who plan to live on state supports received after their children.

2. Brief history of the programme

In its current form, child allowance was implemented under the 2002 Family Support for

Children Act. The Law enacted five different supplemental programmes aimed at improving

the living conditions of poor children and their families. Before 2002, a non-conditional child

benefit programme was in place under the Law on Child Protection of 1968. This initial

transfer provided significantly less money than the current form of CA and worked as a

monthly universal benefit covering all minor children and their families.

As a part of the ‘Social Investment in Children’ programme, policy-makers tied the formerly

unconditional child allowance to education-based requirements in some pilot regions.

Families were allowed to spend the allotment only on clothing, food, school equipment,

school meals and medical check-ups. Following the success of the pilot project, the

government extended the educational conditions of the child allowance (35 BGN/18 Euro per

child) to the entire country in 2002.

The main problem that emerged in the implementation period was the fine-tuning of the

means-testing system of the benefit. As a ministry representative said “everyone wanted to

get it”, but the government decided to increase the amount of the transfer and in parallel with

it, limit the number of beneficiaries. Nowadays, more than half of the total budget of child

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benefits goes to the CA programme. The transfer is under continuous revision and the

Ministry is looking for ways to make it more effective. The government seems quite

dedicated to preserve the conditional characteristics of the allowance, and the social

directorate is planning to employ CA as a part of a comprehensive motivating system to

encourage childbearing. The amount of the transfer is planned to increase to approximately

50 leva (25 Euro) for the second child, in the hope that that it would contribute to the

alleviation of the long-lasting demographic crisis. The possible change in CA’s financing is

not the only possible incentive to motivate child bearing. The ministry is also planning to

increase the amount of the benefit for twins and for children with disabilities.

3. Description of the programme design

Targeting

Unlike in other Eastern European countries that employ education-based family benefits, the

Bulgarian child allowance is not universal and only families with per capita monthly income

below 350 BGN (180 Euro) are eligible. The targeting mechanism of the programme is not

only means (and asset) tested, but has a categorical feature as well. The targeting method can

be described as a three-stage model: (1) age eligibility, (2) income eligibility and (3)

behavioural eligibility. Thus, according to the age categorization, only children up to 20 years

of age are eligible. The transfer is conditional for the period of compulsory education that

covers the last two years of kindergarten (for 5 to 6 years), the whole period of elementary

education (7 to 14 years) and the years of secondary education up to 20 years of age. Income

eligibility means that only those families are eligible for CA whose monthly income per

capita is under the official income level. Lastly, behavioural eligibility refers to compulsory

schooling and prescribes enrolment and regular school attendance.

The legal conditions of targeting are regulated by the Law on Child Benefits. The

administrative process of targeting and assessing eligibilities belongs to the regional agencies.

Transfer size

The current amount of CA is 35 BGN (18 Euro) per child. It was increased from the 2008

level (29 BGN) to its current value in 2009. The benefit makes up 4.6 percent of the average

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monthly wage. Child allowance contributes to the average monthly expenditure of

participating families by 6.3 percent. The poorer the household is, the larger the relative share

of the benefit in the monthly expenditures. In case of extremely poor families, 19.4 percent of

their monthly expenditures originate from the allotment. The average yearly expenditure was

220 BGN (110 Euro) per child in 2007 (World Bank 2009:8).

Child Allowance as a share of the household’s expenditures, 2007

Source: World Bank 2009.

Besides CA, there is another encouraging element in the family benefit system that aims to

motivate children’s enrolment in the next class up. Families are awarded a lump-sum amount

of 150 BGN (75 Euro) when the child registers. This amount probably increases program

participation and compensates for the initial costs of education.

Conditionality

According to the income eligibility of the programme, families below the monthly income of

350 BGN per capita are entitled to the transfer. This income-threshold is reviewed by the

State Budget Act (adjusting for inflation) each year. The income threshold of CA was 150

BGN in 2002 and 300 BGN in 2008, the year when it was increased to its current value. The

education-based conditions incorporate mandatory enrolment and regular school attendance of

the 5-18 years old (20 if attending school) age group. The child is not allowed to be absent

from school more than the predetermined number of classes (it is 5 unexcused classes in

2013). Children must enrol in the next grade up or in high school after graduation from

elementary school. Education is compulsory even at the kindergarten level for children from 5

to 6 years of age. Children are allowed to miss up to 3 days a year from kindergarten. The

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enrolment condition is quite strict in Bulgaria, since a new claim request and relevant

certification on school attendance must be submitted each year by the parents.

The introduction of educational requirements means that potential beneficiaries have to face

dual standards. They not only need to satisfy the income eligibility condition, but must also

comply with compulsory schooling. This dual filtering mechanism has created a new feature

in the beneficiary targeting and supporting process which is unique among Eastern European

countries. Literature on Latin-American CCTs (Das et al. 2005, Fiszbein és Schady 2009)

discusses the ‘self selection’ of beneficiaries as a potential and often desirable eligibility

condition. Supplementing passive requirements (income eligibility) with an active condition

(schooling of children) enhances the ‘self selection’ of the target group. Even among the

poorest, benefits are paid only to those who are willing to pay the non-trivial added costs of

educational requirements. According to Tesseva (2012), cancelling the income test would

improve the efficacy and effectiveness of the allowance and would make its distribution

fairer. According to her calculations, this modification would increase expenses by 28 percent

and extend the proportion of beneficiaries by 29 percent. Furthermore, the alleviation of

administrative burden would allow the benefits to trickle down to the poorest households.

Since CA employs education-related conditions and prescribes compulsory school attendance,

the availability of proper education facilities is crucial. According to ministry representatives,

elementary school coverage of the affected children is sufficient in Bulgaria, despite the fact

that the government reformed public education and closed some schools primarily in the

countryside. The sudden lack of school-slots in rural areas was compensated by a newly

established and free-of-charge school transportation network. Conditions on CA incorporate

pre-school facilities as well. Kindergarten participation is compulsory for the 5-6 years old

age group, and the parents of these children are also affected by sanctions if education-based

requirements are not fulfilled. Unfortunately, the amount of kindergarten slots is rather

limited in Bulgaria, particularly in the constantly growing big cities. According to NGO

representatives, poor children have some disadvantages in the access process. Parents must

ensure kindergarten participation of their children and pay 60 BGN (30 Euro) per month for

institutional care. CA covers only half of this cost. In addition, parents have to pay the extra

cost of kindergarten meals. Local municipalities reserve the right to cover the costs of

kindergarten attendance from their own budget for poor families. However, poorer local

governments are not always able to set money aside for this purpose. Another disadvantage

that affects poor children’s kindergarten attendance is that children from the 5-6 years old age

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group take up all the slots in pre-school facilities. Therefore, younger children (from 3 to 4

years) are sometimes excluded from these institutions because of the lack of capacity.

Sanctions

Various punitive measures are applied if parents fail to meet the school enrolment or

attendance conditions. When the child reaches the 5th unexcused class (or the 3rd unexcused

day in pre-school) money is automatically withdrawn for the respective month. Parents are

not warned before the sanctions are imposed on them, and transfers are not collected in

separated bank accounts as done in other countries. If regional agencies become aware that

the child is over the 5th unexcused class (agencies are informed by the school and the

education inspectorate), they withdraw the money from the family for the next month. The

disbursement of CA is subsequently, thus families receive money for the school participation

of the child only in the beginning of the next month. If conditions are not fulfilled, CA is

suspended only for the given month and only for the absent child. The implication is that if

the child meets schooling criteria in the next month after the month of suspension, the

allotment will be disbursed again automatically, without any particular claim. On the other

hand, if suspension affects only one child of many in the family, the allotment is suspended

only in case of the missing child and the others can receive it.

Other child benefits can be disbursed in-kind as well, when ASA receives any information on

parents who do not spend the allotment on their child (e.g. they spend it on alcohol, etc.). In

this case, child benefits can be provided in-kind (in terms of school-food, shoes, notebooks

etc.) by the authorities. The Bulgarian government has a “Concept on Social Investment”,

which prefers in-kind transfers to cash benefits. However, in case of CA there is no

exception: after 5 (unexcused) absences, the entire monthly benefit is suspended. Of course,

children can miss more than 5 classes if it is necessary and unavoidable, for example when

they are sick and a GP formerly verifies the illness. A different sanction applies if the family

cheats and provides false information on their eligibility to authorities. If doing so, they have

to return the entire amount of money retroactively; as far back as they received the benefit

based on false information. This is a general sanction that affects all benefits under the Law

on Child Benefits.

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The sanctions also have a few positive features. The administrative requirements on schools

to register truancy and early drop-outs provide more or less reliable data, which has been

uncommon in Eastern European educational systems.

Enforcement

The child allowance programme is solely an in-cash programme, which means that it does not

incorporate direct supportive measures. Nonetheless, the government had established family

assistance centres (called Centres for Community Support) in 68 regions by 2010, providing

some supporting activities in addition to the transfer. Community centres were established to

integrate welfare services like health care, educational and social-care institutions. These

comprehensive services are prepared to take care of poor people (CA beneficiaries among

them) in a comprehensive way. The World Bank financially supported the establishment of

these facilities. Social workers at these new family assistance centres have supportive and

counselling responsibilities, and they facilitate the improvement of parental skills and

children’s educational advancement (through catching-up programs, individualized plans for

children with disabilities, etc.). Social workers sometimes conclude home visits in order to

determine eligibility and estimate the living conditions of the given family. Even though the

assessment of eligibility takes only 20 minutes per case, these family visits are rather time

consuming activities. Bulgaria’s spatially spread-out family assistance system is a promising

attempt at reaching and providing service access to the most vulnerable groups. However, it is

likely that total coverage of such groups could only be achieved through the introduction of

general universality.

Our NGO partners pointed to the fact that the number of qualified social workers working

with CA beneficiaries and other poor families is not sufficient and a large fraction of them do

not have the necessary college degree. Our ministry representative also mentioned that the

government takes measures to employ more social workers in the ASA offices. According to

NGO partners, the social workers of the agencies are overburdened and they sometimes deal

with more 100 cases at the same time. As a result, they only have time to administer cases and

are not able to deal with the family or the child in a comprehensive way (e.g. in case work or

group therapy). Because of the insufficient work conditions they regularly suffer from mental

burn-out syndrome and in the majority of cases they often do not know personally the family

or the child they work with. Social workers regularly have to deal with several case-types

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simultaneously (e.g. domestic violence, adoption cases, problems of disabled people etc.) and

have to cope with large amount of administration. Nonetheless, social workers are not directly

responsible for supporting CA recipients or helping them to fulfil the educational

requirements. They only administer cases. NGO partners pointed to the role of the signalling

system (policemen, GPs, teachers etc.) that can inform social authorities in case of truancy or

when the child is in danger. They stated that the signalling system is a good start; however it

serves the purpose of secondary intervention rather than prevention.

Process of verification

Parents must submit the claims directly to the local agencies. They must verify that the

family’s average monthly income per capita is under the predetermined threshold. Income

eligibility must be re-examined every year, causing parents to have to submit a new request to

the Agency of Social Assistance at the beginning of each school year. The staff of the Social

Inclusion Directorate is responsible for the assessment and appraisal of the cases. Local

schools also take on administrative roles. If conditions are not fulfilled, educational

institutions report violations to the authorities, who then proceed to sanction parents.

Authorities often impose a considerable administrative burden on schools without sending

them additional resources.

4. Details of programme implementation

The program is financed exclusively from the state-budget of the Bulgarian government.

International financial organizations (like the World Bank) are also financing programmes in

the country. However these programmes are support services (for example Centres for

Community Support) rater than direct in-cash transfers. NGOs do not participate in the

operation of child allowance; however they participate in social services and other areas of

social care (e.g. child protection).

The Ministry of Labour and Social Policy is responsible for legislation. Practical

implementation of the transfer belongs to the Agency for Social Assistance (ASA), an

organization maintained by the ministry. ASA has a regional network (Regional Agencies for

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Social Assistance) in 28 regions of the country. Regional agencies work directly with the

beneficiaries, assess the entitlements and pay out the benefits. Child allowance is a rather

centralized government-run program. Disbursement of the allowance is not the responsibility

of local municipalities; rather, this task falls on the Social Inclusion Directorate. Regional and

local agencies are working together with local municipalities (but independently from them),

and are responsible for social assistance. Municipalities have other public-administration

functions and operate as managers of social and child-protection institutions.

Financial resources come from the Ministry of Finance and are disbursed to the Ministry of

Labour and Social Policy which provides money to the Agency for Social Assistance. ASA

has 28 offices at the regional level and 47 bureaus at the municipality level. ASA sends

allowances directly to beneficiaries from the open-ended programme budget. The staff of the

agency determines eligibility at the municipality level, checking on compliance with the

requirements.

Local municipalities can provide their own allowances (on a voluntary basis, they can provide

extra support beyond the regular benefit disbursed for childbirth) but they are not affiliated

with CA. Local governments are not covered by the Law on Child Benefits that incorporates

only state-run benefits disbursed from the state budget. However, municipalities are involved

through their schools, since schools report regularly the unexcused absences to the Regional

Educational Inspectorate (REI) that informs both local and regional agencies. Schools have to

report absences to REI each month. When more than five unexcused absences are detected,

social workers of ASA (together with other institutions) intervene.

Our NGO partners highlighted that there are two providers of welfare services at the local

level, the Regional Social Agencies and the Child Protection Departments. The first one

belongs to the Directorate for Social Assistance and the second one belongs to the State

Agency for Child Protection. Although both of them are supervised by the Ministry of Labour

and Social Policy, their responsibilities are often not clear and they work parallel to each

other. These state-run institutions employ the social workers who work with CA and other

social assistance benefits.

All in all, the Ministry of Labour and Social Policy (MLSP) is responsible for the legislation

and financing of child benefits as well as the coordination of local and governmental

institutions participating in the programme. The Ministry has delegated many responsibilities

to the Agency for Social Assistance. Through its national network, under the direct

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supervision of MLSP, the Agency is responsible for the identification of beneficiaries and the

verification of the eligibility.

5. Costs of the programme and the characteristics of beneficiaries

Beneficiaries and coverage

There were 1 091 156 requests for child allowance in 2009, 96.5 percent of which were

approved by authorities. Altogether, a total of 1 053 191 children received benefits. Almost

one-fourth (23.1 percent) of all Bulgarian children (and 19 percent of the households)

received benefits, including one-third (36.2 percent) of poor children and two-thirds (61.6

percent) of children from the lowest income deciles. The transfer makes up 4.6 percent of the

average monthly income, but it is just rarely the only income source for households in

extreme poverty. For poor families, CA generally supplements the guaranteed minimum

income (GMI) scheme and directly targets schooling. GMI is a means-tested anti-poverty

allotment that aims at supplementing the income of poor people up to a given level. This level

is based on a calculated “basket” that incorporates various goods (mostly food, clothes and

basic services) necessary for living. The value of this basket is always under the level of the

minimum income in order to discourage beneficiaries from choosing the allowance over a job.

Child Allowance makes up 14 percent of the total monthly expenditures of poor families and

this proportion is even higher among families living in extreme poverty (19.4 percent).

Among the households with children who live in extreme poverty (the lowest decile) the

overall child benefit participation is 83 percent (World Bank 2009:9). According to Tesseva’s

(2012) calculations, more than a fourth (27 percent) of total benefits is received by the lowest

income quintile. The lowest income deciles are able to cover 44 percent of their expenditures

from the allotment.

Coverage of Child Allowance Programme

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Source: World Bank 2009.

Even though the majority of the poor population is covered by CA, the participation rate of

the non-poor beneficiaries is also significant (over 19.6 percent). According to the World

Bank (2009:10), this is due to the categorical characteristic of the programme and that the

allowance serves demographical goals rather than poverty alleviation. This statement was also

underscored by ministry officials when we interviewed them. In addition, the (poorest)

bottom quintile received only 40 percent of the resources, while the other 60 percent was

disbursed to non-poor families in 2007. Even the richest 20 percent of the population receives

12 percent of the total programme budget. All in all, about half (52 percent) of the benefit

goes to poor families with children. The large leakage propensity of the programme is partly

due to the insufficient means-tested targeting mechanism. As a result, people whose monthly

income exceeds the threshold can also receive child benefits and only 27 percent of the child

allowance expenditures was transferred to the bottom two income deciles. General tax evasion

and underreporting of the income contribute to the negative tendency as well. The significant

leakage and the problems with means-testing were highlighted by both ministry officials and

NGO representatives. They referred to the tendency of two-parent families declaring their

income as if they were single parents with children in order to fall below the income threshold

and receive child allowance. This way, many ineligible households can participate in the

programme; however the exact number of them is unknown because of the large latency. On

the other hand, as the World Bank report (2009) showed, the applied income test is family-

based and not household-based. As a result, the per capita income of the family is

significantly lower than the per capita income of the household.

Shopov et al. (2008:9) points to the fact that although CA is not an anti-poverty programme, it

makes up a significant part of the welfare network for poor people. However, there are many

poor families with children who are eligible to the allowance but do not receive it. Tesseva

(2012) draws attention to the fact that 30 percent of poor households do not receive the family

transfer despite their evident income eligibility. On the one hand, this phenomenon is due to

the stigma and exclusion associated with being a recipient. On the other hand, social workers

in charge of transferring the allowance to the poor are not able to reach target groups, leaving

many poor people undetected by the system.

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Cost of the programme

Since 2003, all social benefit programmes have been financed directly from the state budget,

under the regulation of the central government. Child allowance makes up almost half (45.9

percent) of total income-tested social expenditures. According to Shopov’s (2008)

calculations, the total annual budget of the programme was 231.7 million BGN (116 million

Euros) in 2007, out of which administrative expenses were 9.6 million BGN and 222.1

million BGN was disbursed as transfers. According to ministry representatives, the entire

budget spent on CA is approximately 400 million BGN (200 million Euros) in 2013.

Administrative expenses made up 4.1 percent of the total budget, a rather low share in

comparison to international statistics ranging from 8 to 15 percent (Grosh et al. 2008:28). CA

has the lowest project-administration costs among the four major Bulgarian cash transfer

programmes (disability benefit, guaranteed minimum income and heating allowance). The

bulk of the administrative expenditures on CA go to eligibility verification. Administrative

costs partly emerge because of the expenditures of employing social workers who monitor

school absences (World Bank 2009:7).

6. Impacts of the programme on poverty and school enrolment

Impact on poverty

Child allowance reduces the number of poor people by 11.9 percent, and lowers the national

average poverty gap by 3.7 percent (World Bank 2009:18). In addition, child allowance

alleviates the severity of poverty by 1.8 percentage points. The World Bank Study (2009:37)

found that the average poverty rate among CA beneficiaries was 16 percent before receiving

the transfer. In the case of direct anti-poverty programmes, the poverty rate of beneficiaries

was much higher. In the case of GMI, this rate is 64.4 percent while 63 percent of the Heating

allowance beneficiaries were poor. As an evident effect of CA, the beneficiaries’ 16 percent

high poverty rate diminished to 12.3 percent. Thus the overall poverty impact of the transfers

was 3.7 percentage points. The poverty gap of beneficiaries was 5.8 percent before the

transfer and 3.5 percent after it. This means that child allowance was able to alleviate the

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intensity of poverty by 2.3 percentage points (it is interesting to note that on page 18th of the

same study the listed proportion is 3.7 percentage points).

According to ministry officials, CA is not a direct anti-poverty programme which aims to

alleviate child poverty. Bulgaria’s general anti-poverty project is called “Guaranteed

minimum income” which directly targets people in need who are not able to ensure their

living from primary market incomes. Instead, CA is a monthly subsidy that contributes to the

costs of education and motivates parents to send their children to school or kindergarten. This

point is illustrated by the fact that while the income threshold of CA is 350 BGN, the general

poverty line is around 250 BGN per capita. Therefore, a high number of non-poor people

(above the poverty line) can also receive the child allowance. Nonetheless, it is an undisputed

fact that (despite its relatively low amount) CA has an effect on poverty, especially among

those people whose monthly income depends solely on child benefits. Some other benefits

have a much greater income substitution effect than CA. For instance the allowance for

disabled people, a well-targeted benefit with the clear aim to alleviate poverty among

beneficiaries with disabilities, reaches 70 percent of the minimum wage.

Spatial and ethnic characteristics

Regression analysis of supported families shows that the probability of project participation is

much higher among families who live in the countryside, have lower levels of education,

belong to an ethnic minority or have a female head of household (World Bank 2009:34).

According to our NGO partners, CA has the greatest negative impact on poor and Roma

households. This is due to the fact that the program does not incorporate supply-side

improvements and solve demand-side problems in a comprehensive way. Despite these

controversial tendencies, the World Bank (2006:4) estimates that making child benefits

conditional reduced early school leave among poor and Roma children by 20 percent between

2002 and 2003.

Gender impacts

Only limited data is available on the gender and ethnic outcomes of the programme.

According to the World Bank (2009), the allowance had positive effects particularly on girls’

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school enrolment at the elementary school level. Girls’ school enrolment rate is 7.6

percentage points higher among those elementary school students (6-14 years old) whose

family receives the benefit. In the case of boys’ school enrolment, the comparable

improvement is only 1.7 percentage points in the same age group. Relative gender effects

were the opposite for high school students (15-18 years old). While there was no significant

change in girls’ school enrolment rates, high school boys’ rates increased by almost 20

percentage points compared to the non-beneficiaries. CA has an undisputed positive effect on

school enrolment in both the 6-14 years old and the 15-18 years old age groups. The effect on

school enrolment is more significant at the high school level than at elementary schools

(Grosh et al. 2008:33).

Gender effects of child allowance on school enrolment in different age groups in 2007 (%)

Girls

6-14

years

Boys

6-14

years

All

6-14

years

Girls

15-18

years

Boys

15-18

years

All

15-18

years

Non-

beneficiary

90.6 92.1 91.3 73.6 74.7 74.2

Beneficiary 98.2 93.8 95.8 73.3 94.4 84.8

Difference 7.6 1.7 4.5 -0.3 19.7 10.6

Source: World Bank 2009

Impact on early school leave

The chart below shows that early drop-out rates are significantly higher in the poorest region

of Bulgaria than the national average. The right-hand side of the chart shows the effects of

the reform in the most disadvantaged Severozapaden region separately, which is densely

inhabited by poor and Roma groups. It turns out that while the national statistic showed a

small incline in drop-out rates, the most disadvantaged region actually experienced a slight

improvement. Even though Bulgaria showed no significant change from the year before to the

year after the introduction of child allowance, the long-term drop-out rate of the poorest

Severozapaden region decreased from 24.3 percent to 15.2 percent from 2003 to 2009.

18

Rates of early-school leave before and after the introduction of the education-based

transfer in the poorest region and at the national level (%)

National Poorest region

dif

fere

nce

before after difference before after difference

Bulgaria 20.5 21.9 +1.4 25.3 24.3 -1.0 -2.4

Source of data: Eurostat 2013.

Emerging problems of Child allowance

Our NGO partners reported that child allowance does not offer a comprehensive method to

alleviate poverty or to motivate school attendance. Based on field experiences, parents can

perceive the educational requirement as a penalty, rather than help from the government in the

rearing of their children. Despite the fact that the conditions are universal, poor people suffer

from double sanctions. On the one hand they have to face poorly equipped educational

facilities, poor quality of teaching and relatively higher costs of schooling compared to other

social groups with higher income. For poor families living in rural areas, additional costs of

education (like travelling, clothes, food etc.) mean higher private expenditures in terms of

both absolute costs (e.g. they live far from the school, therefore travelling costs increase) and

relative costs (e.g. compared to their low income).

According to the statistics of the Open Society Institute (2006) Bulgaria is home to one of the

largest Roma populations in South-Eastern Europe. These groups constitute 8 percent of the

total population. Their poverty is rather severe, as 80 percent of the Roma live on less than

4.30 dollars a month. School enrolment rates of Roma children are extremely low compared

to their non-Roma peers. Only 47 percent of them were enrolled in schools and 47 percent

completed primary schooling in the year of the OSI research. Only 12 percent of Roma

children are enrolled in secondary education compared to 81 percent of the overall population.

The problem is exacerbated by the fact that the schools that Roma children attend are

significantly lower quality and are located in extremely poor areas. Although the government

has taken many measures to alleviate these disadvantages, the enrolment and participation

rates of Roma children are rather low and their drop-out rates are very high. Nonetheless, their

school attendance has improved slightly but steadily in the last decade (UNICEF 2007).

19

NGOs also acknowledged general improvements in enrolment and participation statistics in

the public educational system. However they highlight that the general improvement in

quantity was not followed by the same improvement in quality. OECD (2010:8) statistics

show that PISA results of Bulgarian children significantly lag behind the OECD average

according to both the reading and the science scales. In the last few years Bulgaria slid back

from 32nd place to 46th place on the OECD-PISA chart.

References

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Pedro Olinto and Emmanuel Skoufias (2009): Conditional Cash Transfers, Reducing Present

and Future Poverty, The World Bank, Washington, D.C.

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Transfers as a Tool for Reducing the Gap in Educational Outcomes between Roma and Non-

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http://www.oecd.org/education/skills-beyond-school/48630868.pdf (04.12.2013.)

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http://www.opensocietyfoundations.org/reports/monitoring-education-roma (04.12.2013.)

20

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21

Annexes

Enrolment and Child Allowance, Regression Results (World Bank 2009:34-36)

22