G overnment E xpenditure 7 Involvement of the private sector in the provision of services that support the realization of rights further complicates the picture. In these circumstances, states have a duty to monitor and regulate the private provision of these services to ensure that human rights obligations are met. Effective regulation requires public resources, although not in expenditure categories typically associated with economic and social rights. Moreover, budget allocations to social service sectors may not fully represent the amount of resources mobilized to support the fulfillment of rights, particularly when the private sector plays a significant role. For these reasons, indicators, such as public spending relative to GDP, must be taken as preliminary measurements of resource allocation in support of rights, but cannot be presumed to be definitive standards against which government policies are to be assessed. Government spending must also be evaluated in terms of the distribution of benefits among households and individuals. To comply with principles of nondiscrimination, public spending should not be allocated in ways which reinforce existing inequalities or which fail to deliver benefits to vulnerable and marginalized populations. The distributive consequences of the allocation of public spending are often referred to as the ‘incidence’ of government expenditures. For example, health budgets that primarily support hospitals and medical facilities which service middle and upper income families, and to which low-income populations have limited or no access, will not support the realization of economic and social rights to the same extent as alternative budget allocation. For example, the United States spends a great deal of money on primary and secondary education, in 2003-2004, USD 472.3 billion was spent, and the amount has steadily risen since the 1950s.12 In 2004, public expenditure on education was 5.9 percent of U.S. GDP, and the U.S. ranked 8th in its commitment to public education spending, according to the UNDP’s Human Development Report 2006. On the surface this appears to represent a reasonable commitment to spending on education. However, because most of the funding for education in the U.S. is based on local property taxes, wealthier neighborhoods have higher levels of funding for public schools, USD 15,000 or more per pupil, whereas low-income neighborhoods have less than USD 4,000 per pupil. School districts with the largest percentage of minority students receive the least amount of general education revenues, whereas districts with the lowest percentage of minority students receive the highest amount.13 Across the country, USD 614 less is spent per student in the districts educating the most students of color as compared to the districts educating the fewest students of color.14 Efficiency and Effectiveness of Public Expenditure Efficiency is often defined in terms of the financial costs of the inputs required to produce a particular outcome—greater efficiency implies that more can be produced with a given amount of financial resources. Therefore, from the