Supreme Court: Private Kindergartens' Accounting for 'Private Property Public Use Fee' Item Is Incorrect

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[Asia Economy Reporter Kim Daehyun] The Supreme Court has ruled that private kindergarten founders and operators creating an arbitrary item called ‘public use fee of private property’ and managing the budget in a separate account instead of the kindergarten’s accounting account is illegal.

The permission to establish a private kindergarten is granted on the condition that the operator owns the kindergarten land and buildings, so they should not separately receive compensation for their use.

On the 15th, the Supreme Court’s 2nd Division (Presiding Justice Kim Sanghwan) confirmed the lower court’s ruling that dismissed the appeal in the case where Seo, the director and operator of Kindergarten A in Jeonju, and Yoon, the operator of Kindergarten B, filed a lawsuit against the Jeonbuk Jeonju Office of Education to cancel the notification of audit results.

In April 2017, the Ministry of Education notified the Jeonju Office of Education of the comprehensive audit results by the Jeollabuk-do Office of Education, stating that “18 private kindergartens in the jurisdiction formulated and executed budgets for private property public use fees, violating Article 13 of the Enforcement Decree of the Private School Act.”

Accordingly, the head of the Jeonju Office of Education issued a corrective order to Seo and others, instructing them to treat the money transferred to a separate account under the item ‘private property public use fee’ as revenue in the kindergarten’s accounting account.

However, Seo and others opposed, arguing that the head of the Jeonju Office of Education does not have the authority to audit private kindergartens’ accounts or issue corrective orders. They also claimed that the budget formulated as private property public use fees was a lawful allocation under the Enforcement Decree of the Private School Act as expenses for facilities and equipment directly necessary for school education.

The first and second trials ruled against the plaintiffs. The court stated, based on the Early Childhood Education Act and the ordinance on delegation of administrative authority by the Jeollabuk-do Superintendent of Education, that “the head of education is delegated by the superintendent of education, who is the supervisory authority of private kindergartens, with the authority to supervise matters related to school accounting budget formulation and execution.”

It further pointed out, “The classification of budget items in kindergarten accounting must be distinguished according to the financial accounting rules for private educational institutions,” and “expenditure budgets cannot be used for purposes other than intended and cannot be transferred from the tuition account to other accounts.”

The Supreme Court also agreed with this judgment. The Supreme Court stated, “It is not permitted to budget expenditures under the item ‘public use fee of private property’ as compensation for the use of school land and buildings by private kindergarten founders and operators,” adding, “This cannot be seen as infringing on the property rights of private school founders and operators.”

It dismissed the appeal, stating, “The lower court did not err in its understanding of the legal principles regarding private kindergarten accounting, the prohibition of transfer and misuse of tuition accounts, and other related laws.”

This content was produced with the assistance of AI translation services.