Constitutional Court Rules "Ban on Private School Law's Misuse of School Funds and Presidential Decree Delegation Clause Constitutional"

The Constitutional Court has ruled that the provisions of the Private School Act, which delegate the matters related to the income and expenditure of accounts belonging to private schools established and managed by school corporations to be determined by Presidential Decree, and the provisions prohibiting the misuse (transfer or lending to other accounts or improper use for purposes other than intended) of the school fund account, do not violate the Constitution.

According to the legal community on the 5th, the Constitutional Court unanimously upheld the constitutionality of the former Private School Act Articles 29(2) and (6), and Article 73-2, in a constitutional complaint filed by the late Kim Moon-gi, former president of Sangji University, who claimed these provisions violated the freedom of private school operation.

Constitutional Court, Jaedong, Jongno-gu, Seoul.

From November 2014 to June 2015, former President Kim spent about 50 million won in school-related litigation costs from the school fund account over 12 occasions. He was indicted on charges of embezzlement and violation of the Private School Act and was sentenced in the first trial on August 2019 to 1 year and 6 months imprisonment with a 3-year probation.

Although some charges were overturned in the second trial, Kim received the same sentence. During the appeal process, he requested a constitutional review of the Private School Act provisions that formed the basis of his criminal punishment. After the request was dismissed, he filed a constitutional complaint in June 2021.

During the Constitutional Court proceedings, Kim passed away in December 2021, and his son took over the lawsuit.

There were three provisions of the Private School Act that former President Kim claimed were unconstitutional.

The first was Article 29(2) of the Private School Act, which delegates the determination of matters related to the income and expenditure of accounts belonging to schools to be set by Presidential Decree.

At the time of Kim's indictment, Article 29(1) of the Private School Act required the accounting of school corporations to be divided into accounts belonging to the school and accounts related to the corporation's business. Article 29(2) further divided the accounts belonging to the school into the school fund account and the affiliated hospital account, and the school fund account was subdivided into tuition fee accounts and non-tuition fee accounts. Kim challenged the delegation clause stating that "matters related to the income and expenditure of each account shall be determined by Presidential Decree."

Kim argued that this provision violated the principle of prohibition of broad delegation because it did not specify a concrete scope and delegated it to the Presidential Decree.

The second provision Kim claimed was unconstitutional was Article 29(6) of the Private School Act, which prohibits the transfer or lending of income or property belonging to the school fund account to other accounts, except in exceptional cases such as repayment of principal and interest on borrowings. Kim argued that this provision essentially infringed on the freedom of private school operation by preventing expenditures from the school fund account on items set by law as not belonging to the school fund account, even if they were related to school operations.

The last was Article 73-2 of the Private School Act (currently Article 73), which prescribes penalties for the misuse of the school fund account. Kim argued that since Article 29(6), which prohibits the misuse of the school fund account, is based on the vague and ambiguous Article 29(2) enacted by broad delegation, it allows arbitrary criminal punishment depending on the interpretation of law enforcement authorities, thus violating the principle of clarity in criminal law.

The Constitutional Court rejected all of Kim's claims.

Regarding the claim of broad delegation, the Court stated, "The income and expenditure items of the school fund account have technical and detailed characteristics, and it is recognized that there is a need to delegate related matters to subordinate legislation. The items delegated in this case are sufficiently predictable."

The Court explained, "The 'income' items of the school fund account would include various funds collected from students such as tuition fees, donations, school facility rental fees, and interest income, as well as income generated from school facilities or property. The 'expenditure' items would include costs related to school operation and education, which are sufficiently predictable."

The Court also judged that prohibiting the misuse of the school fund account and punishing violations are inevitable measures to secure the financial foundation of private schools and promote their development.

The Court stated, "Strong sanctions prohibiting the misuse of income and property belonging to the school fund account and punishing violations are necessary measures to achieve the development of private schools," and "The penalty provisions cannot be said to infringe on the freedom of private school operation."

The Court pointed out, "The proportion of private schools in public education in Korea is very high," and "These provisions protect the financial foundation that allows private schools to provide quality education as educational institutions while maintaining the public nature of education."

Additionally, the Court cited as grounds for its constitutional judgment the fact that the Private School Act allows exceptions for the misuse of school fund account funds in certain cases, and that courts concretely judge individual cases in somewhat ambiguous situations.

A Constitutional Court official said, "This case is the first decision that the provision of the Private School Act delegating the matters related to the income and expenditure of the school fund account to be determined by Presidential Decree does not violate the principle of prohibition of broad delegation, and that the provisions prohibiting the misuse of the school fund account to other accounts and punishing violations do not infringe on the freedom of private school operation."

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