[Free Speech] The Leaky Local Education Grant Fund Must Now Be Reformed for Efficiency

How much was spent this year on education per student in schools? Recently, controversy has arisen after it was revealed that several hundred million won from the Local Educational Financial Grant (hereafter, the grant) was used for school employees’ personal cultural activities. This has reportedly been repeated for years, and when combined with grants that were wastefully spent through administrative inefficiency in the past, the total is said to amount to several trillion won.

How did the grant come into being? Its origins go back to the 1970s, when the population was rapidly increasing. To secure funding for education, the government enacted the Local Educational Financial Grant Act. In essence, a fixed proportion of national internal tax revenue was allocated to the grant. Over time, the grant rate continued to rise, reaching 20.79% in 2020.

There is a reason why the amount being wasted is bound to be large. Based on that grant rate, the grant per student in 2022 comes to 15 million won. The number of students has continued to decline, yet the grant rate has steadily increased. Meanwhile, tax revenue has risen due to economic growth and other factors. Regardless of the fact that the fiscal balance for the year posted a 100 trillion won deficit, grants were still allocated according to the statutory rate. In this way, while local offices of education received enormous sums from the government under the name of grants, the number of students fell, leaving only the education offices to benefit. Even as the school-age population declined, the number of public officials affiliated with the education offices increased.

Of course, there are also those who oppose reducing the grant. Some education offices have said they will use the surplus for lifelong education programs for adults. In addition, as the population has become concentrated in the Seoul metropolitan area, shortages of teachers and classrooms have emerged. Some argue that the grant cannot be reduced because it must be used to secure personnel and improve facilities.

Cases of putting this position into practice are also becoming more common. The Gyeongbuk Office of Education is reportedly in the process of establishing an online high school. A leading view is that provinces facing population decline need additional support to reduce regional disparities. This could improve the educational environment in small schools and rural and fishing communities where hiring teachers is difficult.

At this point, the need to use tax revenue efficiently becomes clear. To restructure fiscal spending, the method of linking grants to tax revenue should be abolished. Instead, allocations should be made effectively based on the proportion of the school-age population relative to the total population.

As mentioned above, taking the efficiency of fiscal spending into account, tax revenue should be allocated first to areas with greater effectiveness, such as social overhead capital (SOC) and welfare spending. Examples include old age, health, unemployment, and childcare.

It is desirable to adjust the size of the education budget based on efficiency by linking it to the school-age population and welfare demand. This would also help improve fiscal conditions. In addition, transparent use of and oversight over the grant are required. This can be expected to have the effect of preventing fundamental waste in the first place.

Baek Minju, Intern Researcher, Center for Free Enterprise (CFE)

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Original title: [자유발언대] 줄줄 새는 지방재정교육교부금, 이젠 효율적으로 개선해야

Author: Min-ju Baek

Date: 2023-09-11

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=6&idx=26011