Superintendents say government's W7.2tr education grant increase is misleading

Superintendents across the country are calling on the National Assembly to conduct a full fiscal impact analysis of the government's proposed overhaul of the local education finance grant system. The government says grants will increase by 7.2 trillion won ($5.32 billion) next year compared with this year's original budget, but the superintendents say the actual net increase amounts to just 225.9 billion won once real disbursements and various funding reductions are taken into account.

The Korea Superintendents Association held a press conference at the National Assembly on Wednesday afternoon, urging lawmakers to thoroughly scrutinize how the proposed revision to the Local Education Finance Grant Act would reduce education funding and affect local education autonomy.

The government submitted a bill to the National Assembly on Sept. 3 to scrap the domestic tax-linked formula that has governed local education grants since 1971 and replace it with a new calculation reflecting economic growth rates and changes in the school-age population. The government had previously announced that the reform would guarantee stable grant increases while expanding investment from early childhood through higher and lifelong education.

Under the current system, grants are tied to 20.79 percent of domestic tax revenue plus education taxes. The government's proposal would eliminate the domestic tax link and instead base each year's grant on the previous year's figure adjusted for the nominal GDP growth rate and the change in the school-age population over the preceding three years.

The association takes issue with the government's 7.2 trillion won increase figure, saying it is measured against this year's original budget. Compared with the 76.4 trillion won actually disbursed to education offices — including this year's supplementary budget — the increase comes to around 2.4 trillion won, the association said.

After accounting for the expiration of the local education tax worth 1.64 trillion won, a 274.1 billion won reduction in national funding for free high school education, and the 295 billion won sunset of balanced-development special account and local transfer compensation funds, the net increase shrinks to 225.9 billion won, or just 0.3 percent, the association said.

The association said mandatory spending — including natural increases in teacher and staff salaries and outlays required by national policy initiatives such as childcare integration and the after-school care program — would rise by more than 3.14 trillion won, making any cut to investment untenable. Even as student numbers fall, the costs of maintaining schools and classrooms do not fall in tandem, and fiscal demand is also growing for special education, multicultural education, basic academic support and student mental health, it added.

The starting point for calculating grants under the government's proposal is also contested. The bill sets the initial base amount for the new formula at 75.69 trillion won — derived by subtracting the 747.9 billion won national education tax portion from the 76.44 trillion won in grants actually disbursed in 2026. The association warned that because the formula compounds each year's figure from the previous year's base, a lower starting amount would have a cumulative effect on all subsequent years.

The association also criticized the establishment of a future-response fund linked to the grant overhaul. It said the government bill explicitly designates early childhood care and education and higher and lifelong education as permitted uses of the education and talent account, while omitting any mention of support for primary and secondary education. The association also raised concerns about a plan to redirect 40 percent of the national education tax — excluding the financial and insurance sector portion, equivalent to around 1.8 trillion won — from the primary and secondary education grant to the special account for higher and lifelong education support, warning it could reduce funding for primary and secondary schools.

The association made three demands of the National Assembly: verify the scale of education funding reductions compared with current law and assess the fiscal impact on each of the 16 metropolitan and provincial education offices; have the education, finance and interior committees jointly examine the fiscal structure; and exclude the bill from designation as a revenue budget companion bill so that sufficient time is available for review.

"Changing a system that has been the foundation of education finance for 55 years requires sufficient evidence and broad social consensus that the new system will support children's education more stably than the current one," said Jung Geun-sik, chairman of the association. "We ask the National Assembly to judge the reform not by short-term fiscal logic, but by the principle of protecting children's educational conditions and local education autonomy."