-Summary- 

    As of November 2013, there were 295 public institutions under the ｢Act on the Management of Public Institutions｣. The draft budget for supporting those public institutions in 2014 is estimated at KRW43.9 trillion, which represents 12.3% of the government's estimated total expenditure of KRW355.7 trillion. 
    The budget expenses for supporting public institutions are provided for public institutions to produce and supply goods and services, which cannot be done directly by the government but must be provided at the national level. They are provided in the form of contributions, investments, and subsidies. Analyzing whether or not the limited government budget is used efficiently for necessary purposes is essential in preventing budget waste and strengthening fiscal health.      
    This report analyzed budget proposals for 154 out of the 295 total public institutions. We especially focused on analyzing how various reserves are handled at public institutions, whose income-expenditure gap is covered by the government, the appropriateness of using government budgets to support regions neighboring power plants, the efficiency of the budget support provided to R&D-related public institutions, etc. We also analyzed projects of public institutions, which are receiving a vast amount of budgetary support from the government, including Korea Land & Housing Corporation and Korea Expressway Corporation.    
    First, we analyzed the appropriateness of the size of government subsidies provided to public institutions whose income-expenditure gap is covered by the government. In accordance with the ｢Detailed Guidelines on Budgeting｣, these types of public institutions are required to estimate their income from business, surpluses after settlements of accounts, and interest income without ommission and to designate the amounts as the following year's revenue. Typically, it is not necessary for these public institutions to separately manage reserves as the entire amount of their expenditure deficits are covered by the government. However, some of these institutions, including Korea Trade-Investment Promotion Agency (KOTRA) and Korea Cultural Heritage Foundation, are accumulating surpluses after their settlements of accounts as reserves, instead of designating them as the following year's revenue. We pointed out that KOTRA, for example, should designate cashable amounts among new profit reserves and unappropriated retained earnings generated in 2013 as its own income in 2014. We also pointed out the need for reviewing the appropriateness of the size of government contributions and subsidies provided to Korea National Park Service, Human Resources Development Service of Korea, Korea Road Traffic Authority, etc. as excess amounts of surpluses after their settlements of accounts are generated each year at those public institutions, whose income-expenditure gap is covered by the government.          
    Second, we analyzed tax expenditures of public institutions. The sum of the corporate tax deductions/exemptions applied to 30 public corporations during the period of 2008~2012 amounted to KRW524.26 billion. By corporation, the deduction/exemption amount during the same period was the largest at KRW171.01 billion for Korea National Oil Corporation, followed by KRW60.78 billion for Korea Water Resources Corporation, and KRW52.81 billion for Korea District Heating Corporation. By tax deduction amount, the highest amount of deduction (KRW185.9 billion) was applied to overseas exploration and production (E&P) projects. However, given that only a few institutions are eligible for such deductions and the profitability of E&P projects is low, the government should consider closing the tax deductions applied to overseas E&P projects and give support in the form of expenditure budgets in necessary cases.         
    Third, we pointed out that the causer pays principle should be applied so that costs for supporting regions neighboring power plants, which are currently paid by the government, can be borne by the owners of the power plants. In most other similar cases, in which the construction/operation of unwanted public facilities incurs costs for supporting neighboring regions, the owners of the relevant facilities (the causer) bear the whole or an increasing amount of the costs. The total costs for supporting regions near dams and waste disposal facilities are being shouldered by the owners of those facilities. Costs for noise abatement near airports are borne 25% by the government and 75% by Korea Airport Corporation. Considering this, it is necessary to revise the ｢Electricity Business Act｣ and the ｢Act on Assistance to Electric Power Plants-Neighboring Areas｣to have the power plant owners bear the costs for supporting these regions, which are currently funded by the government's Electric Power Industry Basis Fund.                  
    Fourth, we suggested a law revision so that personnel expense carryover and the balances of operating expenses among contributions made to R&D-related public institutions can be returned to the government. As for contributions made to government-funded research institutes, there are no regulations for settling and returning unused personnel expense carryover and the balances of operating expenses for completed projects, leading to the obscure use of funds. Therefore, we pointed out that relevant laws and regulations should be revised to have the balances duly returned to the government.       Fifth, we suggested that the budget bill for supporting Korea Land & Housing Corporation, Korea Expressway Corporation, Korea Resources Corporation, Korea Student Aid Foundation, and Korea Rural Community Corporation should be reviewed for adjustment. As for the Happy Housing Project of Korea Land & Housing Corporation, the plans are being re-examined for Oryu-dong and the Gajwa District, which were appointed as development districts, due to the overestimation of operating expenses, and it is unlikely that approvals can be granted as scheduled. Therefore, we suggested that the government should apply the first-year financial support ratio of these projects in 2014 and reduce the budget amounts accordingly.   
    For Korea Expressway Corporation, we suggested the need to consider setting the government support ratio for preliminary drawing costs and detailed drawing costs of national expressways at 50%, which is the same ratio applied to construction costs, and accordingly reducing the budget for supporting the corporation by KRW25.6 billion. Also, we pointed out that improvement measures should be prepared to prevent the overestimation of traffic volume for national expressway construction. 
    While pointing out rising risks resulting from the deteriorating profitability and increasing investment amounts in the Ambatovy nickel project and the Boleo copper mine project, which are the largest overseas E&P projects of Korea Resources Corporation, we suggested that the government should closely review the expected benefits of new E&P investments and invest with caution going forward. 
    As for the student loans for students from households with three or more children (applied from the third child) pursued by Korea Student Aid Foundation, we suggested that the government should review whether or not the project should continue as the expected benefits are uncertain and giving budgetary support to the project does not seem urgent. The beneficiary households of this project are not those that can influence the current birth rate, implying that its impact on boosting the birth rate will be minimal compared to the size of the budget it requires. Also, given that the National Student Aid Program is already applied to low-income households in the 1st through 8th income bracket levels, it seems less urgent to give budgetary support to this project compared to other educational welfare projects.       
    Regarding Korea Rural Community Corporation, we suggested that more dividends should be paid to the government and the budget for supporting the corporation should be reduced based on the actual number of field workers put into irrigation facility maintenance. The number of irrigation facility maintenance field workers is 1,919, whereas the number is recorded at 2,267 in the 2014 budget bill. Therefore, we pointed out that maintenance costs should be estimated at a proper level by considering the actual size of the field workforce.     
    Aside from the items stated above, we also tried to provide other useful contents, such as the review of the budget bill for supporting public financial institutions, the examination of the problems of the budgeting systems of public corporations, and various suggestions for improvement measures, in an effort to support the National Assembly's deliberation on the government's budget bill for supporting public institutions.