Developing countries and economies in transition have inclined to embrace
decentralization of governance to promote economic growth and development. This
increases the powers of sub‐national governments and creates a special pattern for
the allocation of resources. In Sri Lanka, the delegation of powers of school education
to local authorities made them more powerful in decision making as provincial or
regional authorities were empowered to recruit teachers, train teachers, construct
buildings, and provide facilities in schools. This situation prompts scholars to
conduct studies into school education in Sri Lanka to compare pre and post
decentralized periods and the status of institutions. The overall degree of
decentralization is low in developing countries and economies in transition. The
overall degree of decentralization in Sri Lanka is one digital percent and but the
country has decentralized school education on an even basis. This study is to
understand changes in resources for school education and to analyze how such
changes affect student performance using secondary data on school education of
the pre and post decentralized periods. Results show that student performance has
improved, but not the efficiency in terms of costs. However, since decentralized
school education improves output and matches with the regional preferences of
people, such provisions of school education is preferable in satisfying the voter (or
principal). If there is an inefficient or a weak sub‐national government, the reasons
for such status need to be analyzed to suggest actions to make it efficient.