"Last Year's Education Budget: 80% for Early Childhood and Primary-Secondary, 15% for High School"… Ministry of Economy and Finance Ignites Debate Over Grant Cuts

MoEF Posts KIPF Report on 'Education Grant System Reform' in February Issue of Monthly Fiscal Trends

[Asia Economy Sejong=Reporter Kwon Haeyoung] It has been argued that about 80% of South Korea's education budget is concentrated on early childhood and primary and secondary education, highlighting the need for a reform of the education finance system. Despite the declining school-age population due to low birth rates, the Local Education Finance Grant (Education Grant) has been steadily increasing in line with taxes regardless of financial demand.

On the 17th, the Ministry of Economy and Finance published the February issue of the 'Monthly Fiscal Trends and Issues,' which included a report titled "Suggestions for Reforming Local Education Finance to Expand Investment in Higher Education" by Kim Hyun-ah, Head of Fiscal Policy Research at the Korea Institute of Public Finance. The Ministry of Economy and Finance, the main budget authority, has maintained the position that the education grant system should be reformed in accordance with the declining number of students.

According to the report, based on the 2021 main budget, 82.3% of the total education budget was allocated to early childhood and primary and secondary education. This was followed by higher education (15.9%), lifelong vocational education (1.6%), and general education (0.2%) in order of budget allocation.

The education grant, implemented since 1972, allocates 20.79% of domestic taxes as a priority. As a result, even though the number of primary and secondary students continues to decline, the scale of finance has been maintained in proportion to economic growth. In contrast, other sectors adopt a financial allocation method based on financial demand.

Kim said, "Looking at the statistics from the Organisation for Economic Co-operation and Development (OECD), countries with higher per capita Gross Domestic Product (GDP) tend to have a stronger correlation between higher education expenditure and student numbers than primary and secondary education expenditure," adding, "Countries with a high proportion of high value-added industries and longer life expectancy respond more intensively to higher education expenditure."

According to OECD statistics, South Korea's expenditure on primary and secondary education exceeds the OECD average. However, higher education expenditure falls below the average of advanced countries. The report pointed out that the results of the Programme for the International Assessment of Adult Competencies (PIAAC), which evaluates literacy and problem-solving skills of adults aged 15 to 65 in South Korea, falling below the OECD average, may be due to underinvestment in higher education compared to primary and secondary education.

Kim emphasized, "The government should prepare alternatives to restructure the education finance system, which is concentrated on primary and secondary education, toward higher education," and added, "The education grant is the starting point for reforming the education finance structure to respond to changing financial demands."

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