Because it is linked to domestic tax revenue rather than the number of students
89 trillion in 2028… Currently accumulated money is 19 trillion
‘Flood’ on business including free laptop distribution
“We need to change the way we take 20% of our domestic taxes”
It has been revealed that the local education finance grants (education grants) distributed by the government to offices of education across the country will increase by nearly 20 trillion won over the next four years. This is because while the school-age population is decreasing due to the low birth rate, education grants are designed to automatically increase as the economy grows. In a situation where the government is tightening its belt due to the rapid increase in national debt, there are criticisms that the allocation of education grants that are out of touch with demand is making the country’s finances more difficult.
● 20 million won in education grants per person after 4 years
According to the ‘2024-2028 National Fiscal Management Plan’ submitted by the Ministry of Strategy and Finance to the National Assembly on the 8th, the education grant of 68.87 trillion won this year is expected to increase to 88.69 trillion won in 2028. This is an increase of 19.82 trillion won (28.8%) over 4 years, with an average of 5 trillion won per year. The education grant is money that the central government distributes to 17 provincial and municipal offices of education to support local education finances. The purpose is to help balanced educational development in local areas.
Compared to the overall increase in spending, the rate at which education grants are increasing is unusually fast. The government’s total spending is expected to increase by 15.2% from 656.6 trillion won this year to 756.2 trillion won in 2028. The Ministry of Strategy and Finance has decided to continue the high-intensity austerity policy by capping the total spending growth rate at 3.2% next year, following last year’s record-low growth rate of 2.8%. Despite this, the growth rate of education grants is approaching twice the growth rate of total spending.
The problem is that, unlike the central government and local governments, where there are constantly new places to spend money, such as social welfare spending, the demand for education grants is rapidly decreasing. This is because the school-age population is decreasing due to the low birth rate. According to the future population projections (2022–2072) by Statistics Korea, the elementary, middle, and high school-age population aged 6–17 will decrease by 686,000 (13.1%) from 5.248 million this year to 4.562 million in 2028. On the other hand, the elderly population aged 65 and older, who will be eligible for pensions and various social welfare spending during this period, will increase by 2.091 million (21.1%) from 9.921 million to 12.012 million.
● “The method of distributing educational grants must be changed”
The reason why the grants increase every year, even though the number of students is decreasing and there are fewer places to use the education grants, is because the law stipulates that about 20% of taxes be distributed. The education grants are composed of 20.79% of the domestic taxes paid by the people and a portion of the education tax. Since the domestic taxes increase every year as the economy grows, the size of the education grants will automatically increase every year unless the Korean economy experiences negative growth.
For this reason, provincial offices of education across the country are hoarding unused funds like pocket money. At the end of last year, the amount of money accumulated in 54 funds operated by provincial offices of education across the country was 18.6975 trillion won. When offices of education across the country have extra money, they save it as a fund and use it when needed, but nearly 20 trillion won is accumulated in these funds. In addition, it was revealed through an audit by the Board of Audit and Inspection that each office of education spent 3.5 trillion won on cash welfare support projects over a five-year period last year. In particular, the amount of unnecessary spending over the past three years, such as distributing laptops free of charge to office of education officials, amounted to 42.6 trillion won.
There are concerns that too much money is being invested in education grants, which is holding back the national finances. The argument is that there will be insufficient money to invest in social welfare budgets, where spending demands are rapidly increasing due to the aging population. Experts point out that the method of mechanically taking 20% of domestic taxes for education grants should be changed. Kim Hak-soo, a researcher at the Korea Development Institute (KDI), said, “In a situation where demand for elementary, middle, and high school education is decreasing, we need to look into whether the current method of calculating education grants should be maintained.”
Sejong = Reporter Song Hye-mi [email protected]
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2024-09-10 02:20:39