Recurrent support for school systems has deteriorated in both middle income and the poorest developing countries. Real expenditure per child is falling and spending on educational materials is often below levels that can complement human resource inputs effectively. An important current orthodoxy is that this situation can be ameliorated through various cost recovery schemes, amongst them, the introduction or increase of user fees. This article provides an update of recent trends in resource provision for education in developing countries. It discusses the recurrent budget problem in relation to a specific case study of Sri Lanka and explores the implications of cost recovery associated with the charging of user fees. Concluding remarks emphasise the importance of a balanced response to austerity that values the educational participation of the most vulnerable sectors of the population.