Introduction: A robust process of centralization in education administration and school finance has taken place in Hungary in the course of the present decade. The governance, control, and funding of schools has been taken from local government by the state, and the autonomy of headmasters and teachers has diminished. However, neither the objectives of, nor the motives behind this centralization seem to be completely clear. This paper aims to contribute to the clarification of these objectives and motives, and explores whether the reform has been successful in achieving its declared objectives.

Methods: The clarification of the objectives and motives relies not only on an analysis of the existing literature, but on the textual analysis of various legal texts, together with the use of structured research interviews and press interviews with education policy makers and people working in education administration. Simple statistical methods (including inequality measures and concentration indicators) are employed to determine the impact of the centralization process via the analysis of administrative data on school finances, teacher earnings and student performance. Results: It was found that while the declared objectives of the centralization included the reduction of inequalities in resource availability and teachers’ wages, and an improvement in equality of educational opportunity, in the first two postreform years there was a significant drop in the level of resources per student, resulting in a slight increase of inequality of resources. A drop in expenditure may in principle indicate a growth in efficiency, but in this instance this seems actually to have been achieved at the expense of shortages and other school-level problems with a negative effect on the quality of education. Discussion: The usual requirements to be observed in public sector governance reforms were deliberately neglected, and the reform was carried through in the