Israel Spends More on Education Than Any Developed Country — Ranks Among Least Efficient

With the new school year set to begin in just one week, Israel’s education system is facing a growing gap between the enormous resources invested in it and the educational outcomes delivered to students.

Israel consistently ranks first among developed countries in national education spending as a share of GDP. At first glance, this appears to demonstrate a strong national commitment to education. But the figure is misleading, largely because Israel has one of the highest birth rates in the developed world.

Israel’s fertility rate stands at approximately 2.9 children per woman, almost twice the OECD average of around 1.5. As a result, a larger share of the country’s GDP naturally has to be allocated to education simply because Israel has a much larger proportion of children.

A more meaningful indicator is how much is spent per student compared with the educational results achieved.

Israel Ranks Last in Education Budget Efficiency

Data presented by Israel’s Finance Ministry at an emergency conference on the state of education in the Knesset in June paints a troubling picture.

The Finance Ministry examined the relationship between average education expenditure per student and average PISA scores. According to the analysis, Israel ranked last in budget efficiency, with an estimated gap of 1.52 standard deviations between the results that might have been expected given the country’s expenditure and its actual performance.

Japan and South Korea recorded the strongest efficiency in the comparison, achieving significantly higher educational outcomes relative to their spending.

“Israel could do much more with every shekel spent on education,” said Hadar Fox, education coordinator at the Finance Ministry’s Budget Department. She added that despite major reforms, “we do not see the needle moving” in terms of educational achievement.

PISA Exposes a Problem Beyond Memorization

Israel ranked 35th internationally in the 2022 PISA assessment, placing it near the bottom among developed countries.

Unlike school examinations that often emphasize memorization, PISA examines students’ ability to think, apply knowledge and solve problems in mathematics, reading and science.

Israel scored below the OECD average in all three areas.

The results raise an uncomfortable question for a country that views technological innovation and the high-tech sector as strategic economic assets: Is the education system equipping young Israelis with the analytical and problem-solving skills required in a modern economy?

"Sharp Decline in Mathematics and Science"

Another warning sign emerged from the 2023 TIMSS assessment for eighth-grade students.

Israel had traditionally performed relatively well in TIMSS, particularly because the examination placed greater emphasis on knowledge.

But after the assessment increasingly incorporated elements of reasoning and application, Israel's ranking deteriorated sharply.

In mathematics, Israel fell from 9th place in 2019 to 23rd in 2023.

In science, the country dropped from 16th to 25th place.

For the first time, Israel's science score fell below the international average.

The deterioration suggests that the problem may not simply be a lack of resources, but rather how those resources are converted into actual learning outcomes.

High Spending Does Not Mean More Resources 

Israel spent approximately 4.7% of GDP on education from kindergarten through high school, compared with an OECD average of around 3.3%, according to the latest available 2022 data.

However, when education expenditure is measured relative to GDP per capita, Israel's position looks much less exceptional.

Education spending per student amounted to approximately 23.1% of GDP per capita, compared with 22.8% across the OECD.

In other words, Israel is not dramatically outspending comparable countries when the size of its student population and economy are taken into account.

The challenge therefore appears increasingly to be efficiency, management and educational policy rather than simply the size of the budget.

Too Many Layers of Bureaucracy

Former Education Minister and current president of Panim, Shai Piron, argues that one of the major sources of inefficiency is the number of administrative layers between the government and the classroom.

According to Piron, in many countries funding reaches schools directly or passes through a single intermediary, such as a local authority or regional education district.

Israel, by contrast, has several layers: the Education Ministry's regional structure, local authority education departments and, in some cases, educational networks.

Piron estimates that 9%–12% of the budget can be absorbed by administrative overhead before it reaches students.

The Finance Ministry is attempting to address some of these problems through a proposed reform that would eliminate the ministry's districts and transfer greater responsibility for teacher employment to local authorities.

The reform is also intended to separate the roles of operating and supervising the education system — a situation in which the Education Ministry is currently both an operator and a major regulator of the system.

Coalition Funding and the Six-Day School Week

Piron also points to the extensive use of coalition funds for sector-specific educational purposes as another source of inefficiency.

He has also questioned the continued operation of Israel's six-day school week.

“Why do we need six days?” he asked, arguing that most developed education systems operate on a five-day school week.

The debate illustrates a broader problem facing Israeli education: the system has accumulated layers of institutions, rules and political interests that are difficult to reform.

A Major Blind Spot: Ultra-Orthodox Education

The Finance Ministry's analysis may actually underestimate the scale of Israel's educational problems.

A significant portion of Israel's ultra-Orthodox education system does not participate fully in international assessments such as PISA.

In some ultra-Orthodox schools, core subjects such as mathematics, science and English are taught only partially or at a relatively low level.

This creates a statistical blind spot: students who are outside the international assessment system cannot be fully reflected in Israel's international rankings.

Consequently, the country's actual educational performance could be weaker than the published figures suggest.

Arab Education: More Money - Limited Improvement

The Arab education system presents another challenge.

Substantial additional funding has been allocated through two five-year government development programs for Arab society.

Yet the achievement gap between Hebrew-speaking and Arabic-speaking students remains enormous.

According to the 2022 PISA results cited in the analysis, the gap narrowed by only about 15 points, while the remaining gap was still approximately 110 points — a difference regarded as equivalent to more than five years of schooling.

The figures suggest that increasing budgets alone is not enough.

Money must be accompanied by effective management, qualified teachers, appropriate curricula, measurement and accountability.

New Controversy: Should Bad Results Be Published?

The debate has also moved beyond educational performance to the question of transparency.

Following the publication of the disappointing TIMSS results, Education Minister Yoav Kisch prevented the National Authority for Measurement and Evaluation in Education (RAMA) from publishing results from the latest Tenufa assessment in science for ninth-grade students.

According to the figures cited in the report, only about 3% of students achieved the required level.

Kisch has also initiated proceedings concerning the future of RAMA Director General Gal Alon, prompting criticism from those who argue that the response to poor educational results should be to address the underlying problems rather than limit the publication of data.

The Question Facing Israel as Schools Reopen

With hundreds of thousands of students returning to classrooms next week, Israel enters another school year with a fundamental contradiction.

The country spends heavily on education. It employs hundreds of thousands of education workers and repeatedly launches major reforms.

Yet international assessments indicate persistent weaknesses in mathematics, science, reading, critical thinking and the ability to apply knowledge.

The central challenge is therefore no longer simply:

How much money does Israel spend on education?

The more important question is:

What do we get for every shekel invested in children?

The evidence presented by the Finance Ministry suggests that the answer is currently far from satisfactory.

And as the new school year begins, the education system faces a choice: continue adding budgets and launching new reforms — or fundamentally change the way money, authority and accountability reach the classroom.