Change the outdated subsidy system

The time has come for the government to rationalize the education subsidy system by reflecting the demographic change.

According to data released Sunday, as much as 7.5 trillion won ($5.6 billion) in surplus was left in the 2021 education finance balance of local governments, double from 3.7 trillion won in 2014. The reserve in the education budget for elementary, middle and high schools across the country has tipped over 22 trillion won.

20.79 percent of the government’s domestic tax revenue is supposed to go to the education budget doled out to 17 metropolitan and provincial education offices. The amount grows in line with increased revenue from economic growth. But the spending has decreased due to thinning student population from low birthrate.

Because of the bulging budget, money has been spent without discretion. The Incheon education office spent 30 billion won to hand out laptops to first-year middle school students, and Seoul 60 billion won to give tablets to students in 2021. Schools renovated their classrooms without clear grounds last year.

The education subsidy adopted in 1972 is an outdated system. At that time, the subsidy was necessary to accommodate the spike in students in public education. The ratio of education subsidy against tax revenue has been increasing from the original 11.8 percent due to the importance of education investment. But new births shriveled to 300,000 in 2020 after peaking at 10 million in 1970. As a result, education subsidy per student jumped from 6.25 million won in 2013 to 15.28 million won in 2022, according to the National Assembly Budget Office.

Korea’s spending on primary and secondary schooling is among the highest in the ranking of the Organisation for Economic Co-operation and Development (OECD) countries. The spending for middle and high school education per student at $14,978 is the second highest on the OECD scale. But Korea ranks the lowest in spending for public university students at $11,290, just one-third of $34,036 of the United States and much less than $29,911 of Britain. Korea is the only country that spends less on university students than on elementary school students, among advanced countries.

Education subsidy has been linked to tax revenue to raise the basic capabilities of students needed in the industrial age. But as our industry advances, there must be greater investment in higher education. The efforts have been neglected over the last 20 years. Despite the lush budget, public universities cannot afford online libraries, let alone renovate their old buildings.

The subsidy to local education offices should be set based on real needs. It also must take into account the GDP growth and school-age population, as the Korea Development Institute proposed. The time has come for the government to rationalize the subsidy system by reflecting the demographic change.