Higher education is at risk as the school-age population declines, and inflation rises. Belatedly, the government came up with a plan to use the primary and secondary education budget as a higher education support budget, which is receiving nationwide criticism.

On November 15th, the Ministry of Education and Strategy and Finance held a briefing and announced that they would establish a “special account for higher and lifelong education support (hereafter referred to as a special accounting)” worth KRW 11.2 trillion. The special accounting will be organized using 8 trillion won transferred from the existing university competitiveness enhancement projects and 3 trillion won in education tax among local financial grants. Education tax has been provided only for preschool, elementary, and secondary education.

In order to establish a special accounting, the relevant law must first be passed in the National Assembly. On September 2nd, 14 members, including Rep. Lee Tae-Gyu (Education Committee, People Power Party), proposed three laws related to higher and lifelong education support ("Enactment Bill for Special Accounting for Higher and Lifelong Education Act," "partial amendment bill for Local Education Subsidy Act,” "partial amendment bill for National Finance Act"). If all three laws are passed, it is expected that a new special accounting will be established and financial support to universities will increase. In the "Enactment Bill for Special Accounting for Higher and Lifelong Education Act," Rep. Lee said, “Universities do not have the capacity to create a driving force for change due to the deepening financial difficulties, such as a freeze on tuition fees for more than ten years and a sharp decline in the school-age population. The reason for the proposal was to seek to dramatically expand the finances of higher education and resolve the imbalance in investments throughout the life cycle of nurturing talent from kindergarten, elementary and secondary schools to higher education.”

■ The level of public education expenditure in Korea ranks near the bottom of the OECD countries

Korea's rate of investment in higher education is lower than that of most other developed countries. According to the "Status of Financial Investment in Higher Education through International Indicators," announced by the Korea Council for University Education on November 7th, as of 2019, the public expenditure on higher education per student in Korea was $11,287, less than the OECD average of $17,559 and the 38 countries in the top 30. The amount of public financial input from the government for public higher education expenditure per student was $4,323, ranking 32nd out of 38 countries.

Public funds are heavily invested in primary and secondary education. The government's public funding for higher education in Korea is $4,323, which is 37.3% of the OECD average of $11,589, but primary and secondary education is $13,749, 143% of the OECD average of $9,617. Korea and Greece are the only OECD countries that invest less in higher education than primary and secondary education. An official from the Korea Council for University Education said, “Universities are responsible for cultivating talents to respond to the future society and support the demands of society and industry, to the extent that it is said that the competitiveness of university education is national competitiveness. Absolute investment in higher education is necessary to increase national competitiveness in the long run and nurture key talents who will lead the future society."

■ Abundant primary and secondary education budget

There are opinions that the local education financial subsidy system, provided only for primary and secondary education, should be modified. As tax revenue increases, subsidies increase, but the ratio needs to be adjusted because the school-age population is decreasing. Currently, 20.79% of domestic tax is fixed for local education financial grants, and as tax revenue increases, the amount of grants continues to increase. According to the Ministry of Strategy and Finance, financial grants for local education this year amounted to KRW 81.3 trillion, an increase of about 26% from KRW 60.3 trillion last year, and recorded a record high of KRW 15.28 million per student. Meanwhile, according to the median population estimates announced by the National Statistical Office in 2019, the school-age population is expected to decrease by 22% from 5.46 million in 2020 to 4.26 million in 2030.

The Board of Audit and Inspection of Korea (BAI) also expressed that the current subsidy system was inappropriate. In May 2020, the BAI announced the results of the audit of "the actual situation of improving local education finance efficiency and soundness" and said, “While the number of students decreased, only the financial input increased while diverging from actual demand, and surplus funds from 17 provincial offices of education, increased.” The BAI conducted an on-site audit of the Ministry of Education, from October 31st to November 25th to check the operation status of the local education financial subsidy system.

The number and amount of funds established by the offices of education are also increasing year by year. According to the “2022 Korean Finances” published by the National Assembly Budget Office in April, at the end of last year, 17 provincial and provincial offices of education had 44 funds, and the current amount after subtracting the amount used from the accumulated amount reached a total of 5,375.1 billion won. This is an increase of 86% from the current amount in 2020 (2,894.8 billion won) and 16.8 times higher than the current amount in 2017 (320.7 billion won). As of 2021, 90% of the fund was composed of the Integrated Financial Stabilization Fund and the Education Facility Environment Improvement Fund.

The move to expand the financial support for higher education has been around for a long time. From 2004 to 2020, 11 higher education financial subsidy bills were proposed in the National Assembly, but all were discarded without being resolved within the term. In the current 21st National Assembly, in addition to the bill by Rep. Lee, there is a higher education financial subsidy bill proposed by Rep. Seo Dong-Yong (Education Committee, Democratic Party of Korea) and a special accounting bill for balanced university development proposed by Rep. Yoo Ki-Hong (Education Committee, Democratic Party of Korea). The bill proposed by Rep. Seo adjusts to the domestic subsidy rate so that financial grants for higher education can maintain 1.1% of the GDP. Another bill proposed by Rep. Yoo includes the contents of support for universities regardless of location or size by operating a special account for balanced university development for five years.

■ Superintendents said, “absolutely against”

However, primary and secondary education circles are protesting against the government's plan to use some of the education tax for higher education. They claimed primary and secondary education are still desperately in need of financial support. In September, the National Council of Metropolitan and Provincial Superintendents of Education formed the "Special Committee for Superintendents for Stable Securing Local Education Financial Subsidies." Then, on October 24th, 132 educational organizations, including the National Council of Governors of Education in the provinces and cities, launched the "Joint Countermeasure Committee for the Protection of Local Education Financial Subsidies (JCCEFS)" and started a signature campaign. JCCEFS held a press conference in front of the National Assembly on November 15th and announced that it had received a total of 100,788 signatures. On November 7th, Noh Ok-Hee (Superintendent of Ulsan) held a press conference calling for the withdrawal of the reorganization of local education financial subsidies. She said, “In order to create a customized education to bridge the educational gap and a foundation for future education in preparation for a rapidly changing future society, the education budget for kindergarten, elementary, and secondary schools should rather be expanded."

On November 10th, the National Council of Governors of Education announced the "Analysis of Education Subsidy Issues and Future Education Demand Prospect Report." They revealed that 17 province offices of education need 62.4 trillion won over the next three years to realize future education. Primary and secondary education is planning projects to expand educational welfare, restore emotions, improve educational conditions, establish a foundation for future education, and restructure post-corona school space to meet the demand for future education. Regarding the reason for the increase in the amount of fundraising for each office of education, the council said, “If the budget for local education finance, which has increased due to the increase in the central government budget, which is budgeted during the fiscal year, a significant portion of the budget will be carried over or unused due to the lack of project period. This is why it was inevitably used as an education fund." in the reporter.

■ College crisis

Universities across the country, including PNU, are in serious financial trouble and desperately need investments. An official from the finance department of PNU said, “Unless the structure that allows general finances to come in is reformed, the condition of the university will continue to deteriorate. It seems that the time has come when financial grants for higher education, which can improve the financial condition of universities for general financial purposes, are needed.” An official from the Korea Council for University Education also said, “Currently, government financial support for higher education is structured to secure unstable and limited financial resources by organizing business expenses without a legal basis. Absolute investments in higher education is necessary to increase national competitiveness in the long term and nurture key talents who will lead the future society."

The education community points out that a plan to deduct part of the primary and secondary education budgets and support them to universities is not a fundamental solution. If this plan is realized, a blow to elementary and secondary education is expected. Prof. Park Nam-Gi (Gwangju National University of Education, Education) said, “It is said that the budget for elementary and secondary education is generous, but it is not the case. It is realistic to raise funds by organizing a special budget for higher education, such as the Education Tax Act." Prof. Hong Chang-Nam (Education) also said, "In the short term, the use of education tax is inevitable, but the state's support is needed for the budget for elementary and secondary education."

Reporter Kim Min-Sung

Translated by Seo Hae-Seong