Effect of Capitation Utilization on Operational Efficiency in Public Technical and Vocational Education and Training Institutions in Meru County, Kenya

Public Technical and Vocational Education and Training (TVET) institutions are central to developing skilled human capital for industrialization, employment creation, and socio-economic development. Despite increased government investment through capitation funding, many public TVET institutions continue to experience operational inefficiencies attributed to ineffective utilization of allocated financial resources. This study examined the effect of capitation utilization on operational efficiency in public Technical and Vocational Education and Training institutions in Meru County, Kenya. The study was anchored on Agency Theory and adopted a positivist research philosophy, quantitative research approach, and explanatory research design. A census of 108 management staff drawn from eight public TVET institutions was conducted. Data were collected using a structured questionnaire whose validity and reliability were established before the main survey. The collected data were analyzed using descriptive statistics, Pearson Product Moment Correlation, and simple linear regression analysis. The study achieved a response rate of 94.4%. Descriptive findings indicated that respondents generally agreed that effective utilization of government capitation enhanced budgeting, expenditure control, financial accountability, procurement efficiency, and institutional resource management. Pearson correlation analysis established a strong positive and statistically significant relationship between capitation utilization and operational efficiency (r = 0.734, p < 0.001). Simple linear regression analysis further revealed that capitation utilization exerted a positive and statistically significant effect on operational efficiency (β = 0.781, p < 0.001), explaining 53.9% of the variation in operational efficiency (R² = 0.539). The study concluded that prudent utilization of government capitation significantly enhances institutional planning, financial management, service delivery, and overall operational efficiency. It recommends strengthening financial accountability systems, expenditure monitoring, internal controls, procurement management, and capacity building to improve utilization of government capitation. The findings contribute to education financing literature by providing empirical evidence on the role of capitation utilization in improving operational efficiency within public TVET institutions.