Analysis of indicators and subsidies for education in draft State Budget 2027
««Education» in draft State Budget for 2027: Analysis of figures, subsidies and decisions of first reading»
On 28 October 2026, the Verkhovna Rada of Ukraine adopted draft Law «On the State Budget of Ukraine for 2027» at first reading (Draft Law No. 16000 dated 15 September 2026, Draft Resolution of the Verkhovna Rada of Ukraine No. 16000/P dated 23 October 2026).
The total expenditure on education and science in the draft budget for 2027 amounts to UAH 328.5 billion, which is UAH 50.8 billion (18.3 %) higher than the 2026 figure (UAH 277.7 billion under basic programmes and UAH 278.7 billion including related budgetary allocations).
The main spending authority – the Ministry of Education and Science of Ukraine – is allocated UAH 286.6 billion, which is UAH 43.4 billion more than the planned figures for 2026. With the consumer price index set at 8% in the macroeconomic forecast, the real growth in expenditure on the sector stands at 9.5%. The share of expenditure on education in total state budget expenditure (UAH 7.3 trillion) stands at 4.5% compared with 4.3% in 2026.
The structure of the increase in expenditure on education shows that 73.8% of the additional resources (UAH 37.5 billion out of UAH 50.8 billion) is allocated to the wage fund, including social security contributions. Meanwhile, the volume of public investment projects in the education sector has been reduced from UAH 17.0 billion in 2026 to UAH 13.5 billion in 2027 (-20.6% in nominal terms or -26.5% taking into account the forecast inflation rate).
1. Structure and trends in the education subsidies in 2026 and 2027
A comparison of the levels of funding for the salaries of teaching staff in general secondary education institutions between 2026 and 2027 needs to be based on a single database of budget programmes, as the 2027 draft budget has altered the structure of the budget classification for these expenditures:
In the 2026 State Budget, expenditure on teachers’ salaries was funded through three separate channels: a basic education grant from the State Budget to local budgets amounting to 103.2 billion UAH, a budget programme for supplementary payments to teaching staff amounting to 55.4 billion UAH (totalling 160.7 billion UAH under the General Fund, taking into account adjustments), as well as a separate subvention for the payment of a premium for the prestige of teaching (Programme Classification Code for Expenditure and Lending 2211410) amounting to UAH 7.1 billion. The total annual funding for all three programmes in 2026 amounted to UAH 167.8 billion.
The draft State Budget for 2027 provides for an education subsidy as a single budget programme amounting to UAH 192.8 billion, into which expenditure on the payment of allowances for the prestige of teaching (Programme Classification Code for Expenditure and Lending 2211410) has already been integrated.
A comparison of the figures shows the following:
In relation to the 2026 figure for the education subsidies and allowances, excluding the separate «prestige» programme (UAH 160.7 billion), the nominal increase amounts to UAH 32.1 billion (+20.0%).
On a comparable basis – relative to the total fund for 2026, including the Programme Classification Code for Expenditure and Lending 2211410 programme (UAH 167.8 billion) – the actual increase amounts to UAH 25.0 billion (+14.9% in nominal terms or +6.4% in real terms, taking inflation into account).
Regulatory parameters for remuneration
According to calculations by the Ministry of Finance of Ukraine, the proposed amount of the education subsidies is based on a projected average teacher’s salary in 2027 of UAH 27.3 thousand.
The final provisions of Draft Law No. 16000 for 2027 extend the suspension of Part 2 of Article 61 of the Law of Ukraine «On Education» (regarding the setting of the basic salary for teaching staff in the lowest qualification category at three times the minimum wage). Given the minimum wage level set out in the draft budget, the implementation of this provision would require the basic salary to be set at no less than UAH 28,600, excluding allowances and supplements.
2. Comparative table of targeted subsidies and investment programmes (2026 and 2027)
The draft Budget for 2027 includes targeted programmes for the development of the infrastructure of educational establishments in the list of public investment projects.
Name of the subsidy/budget programme | Law on the State Budget for 2026 | Draft State Budget for 2027 | Deviations (nominal and in %) | Changes to the budget classification and funding conditions |
Education subsidy (total fund for teaching staff salaries) | UAH 160.7 billion (excluding budget code 2211410) / UAH 167.8 billion (in total) | UAH 192.8 billion | +UAH 25.0 billion (+14.9% in comparison) | Combining the basic subsidy, supplementary payments, and the «prestige» programme (Programme Classification Code for Expenditure and Lending 2211410) into a single budget programme. |
Subsidy for providing meals to secondary school students | UAH 14.39 billion (UAH 14.4 billion) | UAH 19.4 billion | +UAH 4.97 billion (+34.5%) | Real growth, taking inflation into account, stands at +24.6%. General Fund. |
Subsidy to support persons with special educational needs | UAH 450.0 million | UAH 495.4 million | +UAH 45.4 million (+10.1%) | Real growth, adjusted for inflation, stands at +1.9%. |
Subsidy for the accessibility and sustainability of pre-school education | UAH 0 (not applicable) | UAH 768.7 million | +UAH 768.7 million (new programme) | Special fund. Of this amount, UAH 614.9 million (80 %) is allocated to development expenditure (capital transfers). |
Creating safe conditions in general secondary education institutions (bomb shelters) | UAH 6.0 billion | UAH 3.7 billion | -UAH 2.3 billion (-38.3%) | The real reduction, taking inflation into account, is -42.9%. It forms part of the public investment portfolio. |
The «New Ukrainian School» (NUS) subsidy | UAH 3.0 billion | UAH 3.0 billion | UAH 0 (0.0%) | The nominal volume has been maintained at the 2026 level |
Subsidy for the purchase of school buses | UAH 2.0 billion | UAH 2.0 billion | UAH 0 (0.0%) | The nominal volume will remain unchanged in comparison to 2026. |
Subsidy for the modernisation of canteens (kitchen units) | UAH 1.0 billion | UAH 1.0 billion | UAH 0 (0.0%) | The nominal volume will remain unchanged in comparison to 2026. |
Subsidy for fire safety in general secondary education institutions | UAH 500.0 million (UAH 0.5 billion) | 0 грн | -UAH 500.0 million (-100.0%) | The programme has been removed from the list of targeted subsidies in the draft Budget for 2027. |
Modernisation of workshops and laboratories in vocational education and training institutions and pre-higher vocational education institutions | UAH 1.0 billion | Within the public investment pool (UAH 13.5 billion) | Determined by the allocation of investment projects | Funding is provided through the mechanism for the allocation of public investment projects. |
3. Overview of changes to targeted transfers to local budgets
1. Expanded and new budget programmes
Meals for secondary school students (UAH 19.36 billion): The volume of the subsidy has been increased by UAH 4.97 billion (+34.5% in nominal terms). The budget programme covers the funding of hot meals for primary school pupils (Grades 1-4) and pupils from privileged categories in Grades 5-11 (12) at schools operating in either full-time or blended learning formats.
Pre-school education (UAH 768.7 million): For the first time, the state budget provides for a targeted subvention to local budgets for pre-school education (which, in line with Article 89 of the Budget Code of Ukraine, is funded from the budgets of rural, settlement, and urban communities) The entire UAH 768.7 million is allocated to a special fund of the state budget (implementation of the programme depends on the actual receipt of earmarked funds into the special fund). Of this amount, UAH 153.8 million constitutes current expenditure, whereas UAH 614.9 million constitutes development expenditure.
Support for people with special educational needs (UAH 495.4 million): An increase of UAH 45.4 million (+10.1%) compensates for the forecast inflation rate (8%) and covers the remuneration of specialists for conducting additional psychological, pedagogical, and remedial-developmental sessions, as well as the purchase of specialised remedial aids.
2. Programmes with unchanged nominal funding levels
Three targeted programmes have been retained at their 2026 levels in absolute terms:
New Ukrainian School – UAH 3.0 billion (purchase of teaching materials, equipment for science, maths and technology classrooms, computer and multimedia equipment, textbooks and teacher training);
School buses – UAH 2.0 billion (purchase of vehicles, including those specially equipped to transport people with reduced mobility, on a co-financing basis from local budgets);
Modernisation of school canteen units – UAH 1.0 billion (major repairs and renovations of canteens in general secondary education institutions on a co-financing basis).
The implementation of a three-year specialised secondary education programme (Grades 10–12) will launch in 2027 in line with the Law of Ukraine «On Comprehensive Secondary Education». Maintaining subsidies for the New Ukrainian School (NUS) and school buses at the 2026 level without indexation for inflation means a reduction in the physical volume of purchases of equipment for academic lyceums and transport units funded by the state, in proportion to the rise in producer prices.
3. Reduced and cancelled programmes
Equipping bomb shelters in general secondary education institutions (UAH 3.7 billion in 2027): Funding has been reduced by UAH 2.3 billion (-38.3%) compared with 2026 (UAH 6.0 billion).
Fire safety in general secondary educational institutions (UAH 0): The subsidy, which amounted to UAH 500 million in 2026, is absent from the 2027 draft Budget. All expenditure on compliance with State Emergency Service regulations and the installation of fire protection systems in 2027 will be funded exclusively from local budgets or external non-budgetary sources.
4. Mechanism for the allocation of subsidies by region and community budget
The draft Law on the State Budget for 2027, adopted at first reading, does not include an annex with the allocation of the education subsidy amongst local budgets. As in 2026, the total amount of the subsidies (UAH 192.8 billion) is allocated to the Ministry of Education and Science of Ukraine, with further distribution amongst community budgets and regional budgets to be determined by resolutions of the Cabinet of Ministers of Ukraine.
Analysis of the current regulations and legal framework (The formulae for the distribution of the education subsidies among local budgets, approved by CMU Resolution No. 1088, as amended, as well as the procedures for the allocation of earmarked subsidies in 2026) determine the objective parameters for the distribution of resources across groups of regions and communities in 2027:
1. Application of restrictions on low-enrolment schools (a threshold of 60 pupils for 12-year schools, 55 for 11-year schools, and 45 for 9-year schools)
From 1 September 2026, a provision of the «Procedure and Conditions for the Provision of Educational Subsidies» came into force, under which subsidies shall not be used to fund general secondary education institutions (with the exception of primary education institutions) where the number of pupils is fewer than 60 (from 1 September 2025 to 1 September 2026, this threshold was 45 pupils).
In 2027, this provision will be applied for the first time throughout the entire financial year (from 1 January to 31 December), whereas in 2026 it was in force for only four months (September–December).
Regional cross-section: The largest proportion of general secondary schools with a pupil enrolment of between 45 and 55 pupils (in Grades 1–9 and 1–11) is concentrated in regions with a high proportion of rural population and an extensive network of small localities (namely Khmelnytskyi, Vinnytsia, Zhytomyr, Chernihiv, Poltava, Sumy, Kirovohrad, Rivne, and Volyn regions, as well as the mountainous areas of Zakarpattia, Ivano-Frankivsk, Lviv, and Chernivtsi regions).
Financial implications: For communities in the aforementioned regions, children attending such schools are not taken into account when calculating the amount of the education subsidy. The remuneration of teaching staff in institutions with fewer than 55 pupils (or, where such institutions retain their status as a gymnasium or lyceum without being downgraded to a primary school) is funded exclusively from the general fund revenue of the relevant community’s budget.
2. Ratio of actual to calculated class sizes (CCS)
The formula for allocating the education subsidy is based on the estimated class size (ECS), which depends on the density of pupils per square kilometre and the proportion of the rural population in the community (ranging from 10.0 to 27.5 pupils per class).
Urban communities and regional centres: The actual class sizes in large cities (Kyiv, Lviv, Dnipro, Odesa, Vinnytsia, Khmelnytskyi, Ivano-Frankivsk, Poltava, Cherkasy, etc.) are equal to or exceed the ECS set for them (24–27.5 pupils). This ensures that the calculated requirement for the wage fund is fully covered by the education subsidy.
Rural and settlement communities with low population density: In communities where the actual average class size is lower than the standard class size (SCS) determined by the formula, the calculated amount of the subsidy is less than the actual wage fund for teachers. Throughout 2026, this shortfall was covered either by allocating additional funds from local budgets or through the reallocation of the unallocated reserve of the education subsidy by resolutions of the Cabinet of Ministers of Ukraine in the third and fourth quarters (in particular, a reallocation in September 2026 amounting to UAH 193 million for individual tranches of supplementary payments). In the draft budget for 2027, maintaining the unallocated volume of the subsidy at the level stipulated by law retains this same mechanism of manual adjustment via government resolutions. It is unclear whether the population of settlements will finally be classified as rural, as defined by legislation; currently, this formula was in place in 2026. For example, the Letychiv Settlement Council in Khmelnytskyi region lost more than UAH 2 million in subsidies as a result.
3. The influence of the IDP cohort and forms of education on the distribution of resources between regions
Enrolment accounting: The formula-based calculation of the education subsidy is based on data from state statistical reports (ISUO / AIKOM) on the number of pupils as at the start of the academic year. In regions with a high proportion of internally displaced persons and pupil migration (Kharkiv, Zaporizhzhia, Dnipropetrovsk, Mykolaiv, Kherson, Donetsk, and Sumy regions – as regions of origin and transit; Kyiv, Lviv, Poltava, Vinnytsia, Khmelnytskyi, Cherkasy, and Zakarpattia regions – as receiving regions), there is a discrepancy between the statistical figures and the actual places of residence and schooling of children throughout the year. In the Budget Conclusions of the Verkhovna Rada of Ukraine (Resolution No. 16000/P dated 28 October 2026), the Cabinet of Ministers was instructed to address the issue of verifying data on the number of IDPs for the calculation of budget transfers.
Allocation of targeted subsidies (accommodation, meals, buses):
The allocation of the subsidy for bomb shelters (UAH 3.7 billion) and the modernisation of canteen units (UAH 1.0 billion) is made using a points-based assessment of projects within the Unified Digital Ecosystem for Public Investment Management (DREAM), applying safety zoning coefficients for the territories (priority is given to frontline and border regions – Kharkiv, Zaporizhzhia, Mykolaiv, Dnipropetrovsk, Sumy, Chernihiv, Kherson, and Odesa). A 38.3% reduction in the total shelter subsidy proportionally reduces the funding limit available to these regions.
The allocation of the subsidy for meals (UAH 19.4 billion) is made in proportion to the number of pupils actually attending in-person or blended learning in educational institutions. Accordingly, the largest share of this transfer goes to the rear regions of Western and Central Ukraine, where the proportion of institutions operating in an in-person format is 85–100%.
5. Results of the first reading of the draft State Budget for 2027 and their financial implications for communities
Based on the results of the first reading of Draft Law No. 16000, the Verkhovna Rada of Ukraine adopted Budget Conclusions, which set out the parameters for the Cabinet of Ministers of Ukraine to finalise the document before the second reading.
Key decisions directly relating to the funding of education at the local level:
1. Maintaining the rate at which PIT is allocated to community budgets at 64%. The Government’s Draft Budget for 2027 proposed abolishing the additional 4% personal income tax and reducing the allocation rate of personal income tax to the budgets of rural, settlement, and urban communities from 64% to 60%. The Verkhovna Rada Committee on Budgetary Matters and Parliament supported the amendment to maintain the 64% PIT allocation rate to community budgets. For the education sector, this decision preserves the revenue base of local budgets, from which, in line with the Budget Code, the following are funded:
salaries for non-teaching staff in general secondary education institutions (administrative, technical, and support staff);
payment for utility services and energy supplies for all educational institutions in the community;
full maintenance of pre-school and after-school education establishments;
mandatory co-financing from local budgets to receive state subsidy for the New Ukrainian School (NUS), school buses, canteen units and bomb shelters (ranging from 5% to 30%, depending on the community’s tax capacity index).
2. Legal regime for remaining educational subsidies. The Government’s draft of the law provided for the withdrawal of any remaining educational subsidy funds, unused at the end of the financial year, from local budget accounts into a special fund of the state budget (for further distribution by resolutions of the Ministry of Education and Science). The Budget Conclusions after the first reading included a directive to the Government to review this provision with a view to retaining the remaining educational subsidies in local budget accounts so that communities could use them for their intended purpose: material and technical support and security measures in educational institutions.
3. Finalisation for the second reading. In line with the Rules of Procedure of the Verkhovna Rada of Ukraine and the Budget Code, the Cabinet of Ministers of Ukraine shall, within two weeks, prepare a draft law for the second reading, taking into account the Budget Conclusions. At this stage, it is determined whether a detailed distribution of the education subsidy among community budgets, as well as the final funding amounts for public investment programmes, will be included in the text of the law.
The DECIDE project is implemented by NGO DOCCU and PHZH International Projects in Education with the support of the Embassy of Switzerland in Ukraine.