[Editorial] Reform the Excess Education Grant System for Fiscal Efficiency

A long-delayed overhaul of the Local Education Subsidy Grants system, which has remained largely untouched since its introduction in 1972, now appears to be moving forward. The Ministry of Education and the budget authorities kicked off the process on the 8th by holding a public forum to discuss the direction of reform. Now that public debate has begun in earnest, the long-pending reform plan must finally be brought to a close.
As is well known, there are two major issues in the debate over the Local Education Grant. The first is whether to revise the current automatic linkage system, under which 20.79% of national tax revenue is set aside and allocated automatically. Most other fiscal items reflect inflation or economic growth, but the education grant alone is tied to a fixed percentage.
Both supporters and opponents of this fixed system have their reasons. Critics argue that the total grant amount can no longer be left unchecked when the school-age population is falling sharply. Those who want to preserve the current system, however, say it should remain as a minimum safeguard to ensure stable support for education.
The other issue concerns how the funds are used. At present, the grant is limited to elementary and secondary education. Yet while the number of elementary and secondary students is dropping rapidly, the grant itself continues to rise. That is why some are calling for its use to be expanded downward to early childhood education and upward to higher education. Concerns about this inefficient allocation were also raised in a recent report by the Organisation for Economic Co-operation and Development (OECD). The OECD noted that Korea's financial support for higher education falls below the OECD average, while support for elementary, middle and high schools exceeds it. It also recommended gradually reducing the share allocated to elementary and secondary education and redirecting the resources to higher education and lifelong learning.
Debates over reforming the Local Education Grant have surfaced under every administration, yet no government has managed to resolve them. It runs counter to fiscal rationality for a huge amount of public tax revenue to be fixed to a single purpose for more than half a century. Whatever the item, decisions on taxation and spending should be guided by rational standards.
The system should no longer be allowed to keep expanding by inertia even as the number of students declines. In schools, it is common for funds to be spent and still end up wasted on unnecessary items. Other sectors struggle with budget shortages, so why should education alone be so flush with money that it has more than it can use? From the standpoint of efficiency, this is a failure in the management of national finances.
That said, it must not be denied that the Local Education Grant is the driving force behind elementary and secondary education. Nor is it desirable to cut the total grant amount indiscriminately. Resources should be reallocated rationally after considering a range of factors. With the school-age population shrinking, demand for aging-related and lifelong learning programs rising, and investment in higher education remaining weak, we hope all of these education challenges will be placed on the table and carefully considered.
Nurturing talent through education determines the nation's future. Education is that important, and it requires substantial funding. Even so, education budgets must also be distributed transparently and according to rational standards.