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Title Analysis of the Operation of Local Education Finance

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Analysis of the Operation of Local Education Finance
- Focusing on the Decline in Student Numbers -
December 28, 2016
Han Jaemyung

    The number of school-age children (aged 3 to 17) dropped from 10.9 million in 2000 to 7.34 million in 2016, and it is expected to decline further to 6.01 million in 2040. The combination of the shrinking student population and rising education expenditures due to newly introduced student welfare services, including free school meals and subsidized pre-kindergarten programs, creates a clear need to revisit government policies on the operation of local education finance in order to enhance the quality of public education within the budget limit.
    In this context, this report assessed the appropriateness of the key policy directions and financial support plans of the relevant government ministries and agencies in consideration of the decreasing student population and how the decline affects the existing government grants for local education services, the required number of teachers per school, the ongoing school consolidation process, and the current efforts for improved learning environments, especially from the perspective of effectiveness and equality.
    The assessment has made several notable findings as described below:
    First, government planning for education programs is often not closely aligned with government budgeting, creating difficulties in securing funds for policy implementation.
    Second, the Ministry of Education's existing methodologies for determining the required number of teachers and the teacher allocation criteria currently used by the Province and City Education Offices have limitations in properly adjusting the required number of teachers per school in response to the current declining student numbers.
    Third, a recent drop in the number of closures and consolidations of small schools and the expansion of educational welfare services, such as subsidized pre-kindergarten programs, have led to a relative decrease in public funding allocated to the improvement of education environments.
    Fourth, there is a lack of alignment between the total volume and allocation of government grants for local education services and the number of students. Fifth, the existing criteria for determining the amount of government grants to local education authorities include variables which may be adjusted by the Province and City Education Offices at their discretion, such as the number of schools and classes, generating large differences in public funding between local education offices.
    In this regard, the government needs to revise its mid- to long-term policy directions based on a more practical budget plan, adjust the current number of classes to an appropriate level in consideration of the declining student population and education quality, and refrain from increasing the number of teachers. Also, it should develop a standard school closure and consolidation process, improve the current resource allocation method in response to school closures and consolidations, enhance the criteria and incentives for school closure and consolidation, increase administrative and financial support for school closure and consolidation, and adjust  such government support according to the teacher reallocation plan of the Province and City Education Offices. In addition, the total volume of the grants should be determined not according to the uniform statutory percentage but from the perspective of appropriate education costs, and the existing methods of allocating such grants should also be improved so as to better reflect the changing number of students.

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