Brazil’s main public-school financing fund has narrowed one of the country’s deepest education gaps, but a Folha de S.Paulo review found hundreds of millions of reais in payments apparently made outside the classroom.
The Fund for the Maintenance and Development of Basic Education, known as Fundeb, pools state and municipal tax revenue with federal top-ups and redistributes it according to enrollment. It is the backbone of Brazil’s public basic education system, covering about six of every ten reais spent in the sector.
What Fundeb Changed
After Congress renewed Fundeb in 2020 and wrote it into the Constitution, the federal government’s share rose in stages from 10% to 23% this year. Folha reported that the fund reached R$342 billion in 2025, about USD 66 billion at recent rates, and that federal supplementation should exceed R$60 billion this year.
The distributional effect has been large. According to National Treasury data tabulated by Todos pela Educação for Folha, no Brazilian municipality now spends R$8,000 or less per student per year, a level that applied to about one-third of cities in 2020. Municipalities spending more than R$15,000 per student rose from 8% in 2020 to 64% last year.
The gains remain uneven. Northern and northeastern cities still trail the national average: 52% of municipalities in the North and 42% in the Northeast surpassed R$15,000 per student, compared with 64% nationally. Manoela Miranda, education policy manager at Todos pela Educação, told Folha that Fundeb had brought “a very important redistributive factor,” even though inequalities persist.
The Misuse Allegations
Folha said an analysis of millions of Fundeb bank-statement records, prepared with the education-research group Iede, identified R$389.7 million in spending outside education, roughly USD 75 million. The newspaper found transfers to health funds, health and dental plans, pharmacies, pension entities and, in some cases, churches.
Brazil’s education law restricts Fundeb money to “maintenance and development of teaching.” It bars spending on supplementary food programs, medical and dental care, pharmaceutical and psychological assistance and other forms of social assistance.
The Federal Court of Accounts (TCU), Brazil’s federal audit court, told Folha that, in general terms, transfers to health funds, pension entities or religious institutions “do not have support in current legislation.” The court noted that social charges linked to active education workers’ payroll may be paid with Fundeb money, which could explain some pension-related transfers.
Folha cited Ipatinga, in Minas Gerais state, as having transferred R$50 million to its municipal health fund, including R$11.7 million last year. Jaraguá do Sul, in Santa Catarina, said its R$22 million in transfers since 2021 related to health-plan deductions included in civil-servant pay. Sobral, a Ceará city often cited as an education benchmark, said R$3.8 million in health and dental plan costs related to employee compensation.
Other cases had less explanation. Folha reported that Caridade, in Ceará, sent R$6.8 million from Fundeb to its health fund since 2023, all in round-number payments; the city did not respond. Rio Largo, in Alagoas, made a single R$2.5 million transfer in January 2023 to the Assembly of God in the state, according to Folha; the city and church did not respond.
Who Polices the Money
The National Education Development Fund (FNDE), the Education Ministry-linked agency that manages Fundeb, told Folha that oversight belongs to control bodies. That responsibility is divided between the TCU and local audit courts.
A TCU study on health transfers argues that Brazil’s 1988 Constitution deliberately decentralized public-service funding and execution, while requiring local councils, audit systems and courts to share oversight. In a separate Fundeb-related precedent cited by Gepam, the TCU ruled that education-fund court-award payments could be used only for education and not for lawyers’ fees or other municipal priorities.
That legal framework leaves a practical problem: Fundeb has become both larger and more complex. It has improved equity in school financing. But Folha’s findings suggest that, without stronger traceability and faster local scrutiny, the same decentralization that lets money reach poorer classrooms can also make misuse harder to detect in time.