Government signals possible overhaul of local education finance system tied to domestic tax revenue

Park Hong-keun, minister of the Ministry of Planning and Budget, said Thursday the government is "comprehensively reviewing various scenarios" regarding a possible adjustment to the domestic tax-linkage rate underpinning the local education finance grant system.

Speaking to reporters at the Government Sejong Complex, Park said the current structure is "rigid," with the grant fixed at a set percentage of domestic tax revenue — unlike other budget items indexed to inflation or economic growth — even as the school-age population has fallen sharply while the grant itself has grown substantially.

Ministry of Planning and Budget Minister Park Hong-keun [Yonhap]
Ministry of Planning and Budget Minister Park Hong-keun [Yonhap]

Under the current system, 20.79 percent of total domestic tax revenue is automatically allocated to local education finance grants. Park's remarks were widely interpreted as a public signal that the government is open to revising that linkage rate as part of a broader overhaul of the grant system.

"Our basic position is that the school-age population must be reflected," Park said. "We can also consider various economic indicators. We have been reviewing multiple scenarios comprehensively and are in ongoing communication with the Ministry of Education and Cheong Wa Dae."

Park noted that while student enrollment has declined, the grant has grown significantly, and that per-student support in South Korea is already high compared with other OECD member countries. "The time has come to take a comprehensive look," he said.

He added that the broader question of balanced investment across all levels of education in South Korea could no longer be set aside, saying the current discussion should extend to a review of the overall investment structure in education finance.

Earlier Thursday, Park outlined the direction of the proposed reform in a post on X, formerly Twitter.

He said the government would ensure the total grant amount would not fall below previous years' levels and stressed that the reform was "by no means an attempt to cut funding for primary and secondary education." He added that the government's commitment to strengthening public education for children remained unwavering, and pledged to uphold five principles throughout the reform process.

Those principles include keeping the total grant no lower than in previous years, continuously expanding per-student support, and securing the fiscal stability of primary and secondary education finance against fluctuations in the grant.

The government also said it would reinvest equitably in university education, lifelong learning and early childhood education, and would incorporate the declining school-age population trend into the revised system.

The education community, however, has urged caution. In a joint statement June 22, the Korea Elementary School Principals Association, the Korea Secondary School Principals Association, the Korea Special School Principals Association and the Korea Private School Principals Association said the argument that "education finance should shrink because the student population is shrinking" reflects "a complete failure to understand the actual operational structure of schools," and expressed concern over the direction of the reform discussions.


y2k@heraldcorp.com