Country information for Iceland - Financing of inclusive education systems

In 2015, government expenditure on education was approximately 6.87% of gross domestic product (GDP), continuing a downward trend seen over the past 10 years. However, expenditure remains above the Organisation for Economic Co-operation and Development (OECD) average (5.6% in 2012). Iceland was ranked second among the Nordic countries on this measure in 2011. However, it is the only Nordic country with lower public expenditure as a percentage of GDP in 2011 than in 2008. (Source: External Audit of the Icelandic System for Inclusive Education, Annex 3, p. 85)

However, there have been no major changes in education funding in Iceland since 1996, when the municipalities became responsible for organising and financing compulsory education and the local support services. The new regulations concerning special needs education and support services, which were accepted in 2010 following the new education acts of 2008, contain various changes, for example concerning financing. In older regulations, there were certain quotas calculated for special needs education and support services. However, in the new regulations there are no such quotas, but certain goals for support and services. The municipalities are supposed to organise and finance the support based on the pupils’ relevant needs. However, there are still quotas intended for municipalities, based on the diagnosed disabilities. This central fund, the Local Authorities’ Equalization Fund, distributes the funds based on guidance from the State Diagnostic and Counselling Centre.

In 2014, 19% of the education budget of municipalities was designated for special provisions for learners with special educational needs (SEN) (Ministry of Education, Science and Culture, 2014; Sieweke, 2016). During the 2014–2015 school year, 12,263 pupils received some special education or support, or 28.4% of all pupils – an increase of 60 pupils from the previous year (Statistics Iceland, 2016). (Source: External Audit of the Icelandic System for Inclusive Education, Annex 3, p. 86).

Within the Local Authorities’ Equalization Fund, there are three areas of funding linked to meeting SEN. In 2016, the estimated amounts include 2 billion Icelandic króna (ISK) for grants to meet diagnosed SEN, ISK 1.2 billion to support the three special schools in Reykjavík and a ISK 300 million contribution for immigrant education. (Source: External Audit of the Icelandic System for Inclusive Education, Final Report, p. 46).

Pre-primary education

The municipalities fund pre-primary education, but they may determine fee collection for a child’s pre-school attendance. However, the fee collected for each child may not exceed the average real cost incurred by each child’s attendance at pre-schools operated by the municipality. There are no separate funds for special education.

Compulsory education

Compulsory schooling, including books, course supplies and study trips, is free of charge. Central government provides funds to municipalities to meet the needs of learners with disabilities within compulsory school age. The following two conditions apply to payments to the municipalities:

  • that the pupil in question is a legal resident of the municipality and their disabilities have been diagnosed;
  • that, when the disability falls within the frame of reference of the Local Authorities’ Equalization Fund, there is a need for special assistance.

Payments to the municipalities for learners with disabilities depend on levels of disability. The same amount is expected to be paid per pupil with the same degree of disability, irrespective of whether the special education provided varies from one municipality to another.

The Advisory Committee of the Local Authorities’ Equalization Fund has set the working rules for deciding the degree of disability in accordance with its type. The type of disability that falls below a defined level should rely on special assistance in the form of a payment to the local authority. The amount allocated to local authorities from the Equalization Fund for each individual pupil is meant to provide an educational opportunity for the individual pupil. This amount differs according to medical diagnoses and is in accordance with the amount the individual and their family gets from the national security system because of a given disability, as described in the Act on the Affairs of Disabled People of 1992. The State Diagnostic and Counselling Centre has the final say on whether the amount suggested by other specialists is in accordance with the given disability.

When the local authorities draw up their annual budget, they set aside an amount to finance special educational provisions within the municipality. The local authorities can either provide an educational opportunity in the pupil’s school or use the money to buy services in another school in the local community or in another community. This could include a special class or a special school. Communities can share the running of a special class or a special school and local authorities set aside extra money for this purpose.

In each community, the local authority, with the help of head teachers, specialist services, school doctors and other relevant parties, assess whether there are pupils in the community who, because of disability or other reasons, need special education. Within each school, the head teacher, in co-operation with the class teachers, evaluates whether there are pupils who need special education. The head teacher submits the special educational plan to the local authority. After the local authority has allocated the amount to be used for special education, each school makes an education plan for an individual, a group or a special class. The plan includes teaching, materials and assistants.

Upper-secondary school

The state treasury pays upper-secondary school operating costs. In the upper-secondary schools, pupils do not have to pay school fees but they pay for course supplies and a part of the cost of materials. Applications for funds for educating pupils in need of special support are submitted to the Ministry of Education on an individual and/or group basis.


Last updated 14/02/2018


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