▪ The Local Education Subsidy Act prescribed the financial resources of the subsidies to consist of 20.79% of internal taxes and some of the education tax.
▪ Local education subsidies are funds transferred from the central govern—ment to the metropolitan and provincial offices of education to grant local education autonomy. In 2021, the subsidy size was approximately 70% of the revenue budget of the offices of education.
▪ Recently, there has been a discussion about reforming the subsidy calculation method—the total amount is heavily affected by the size of internal taxes—and the relationship between general local finance and local education finance.
▪ While the financial capacity of the metropolitan and provincial offices of education is improving, the financial burden on the central government is increasing, making the overall national resource allocation unreasonable.
▪ There is a concern that the government funding gap between education levels may impair the quality of higher education.
▪ The finance for offices of education increased because the government drew up a supplementary budget that reflects the recent hike in internal tax revenues and the size of local education subsidies grew.
▪ The discussion on reforming the current local education subsidy system started from the inefficient resource allocation of the national finance due to the budget rigidity and the possibility of difficulties in establishing a stable financial management plan for metropolitan and provincial offices of education due to the volatility of internal taxes.
▪ The government must prepare various alternatives for the subsidy system and closely examine the effects of each alternative on beneficiaries of education investments and financial reduction.