'We can barely afford teacher pay raises': education chiefs call W7tr grant increase an illusion

Local education finance grants are set to rise by more than 7 trillion won ($5.06 billion) from this year's original budget, but education officials warn that the actual fiscal conditions facing regional education offices could still deteriorate.

Measured against this year's supplementary budget, the increase may not even cover the natural growth in staff payroll costs — and other revenue streams could shrink as education tax funds are redirected to higher education and temporary funding sources expire.

The Korea Superintendents Association on Tuesday released an analysis of the fiscal impact of the local education finance grant reform, warning that "it is difficult to conclude that the fiscal conditions of regional education offices will improve simply because the 2027 grant total is higher than the previous year."

The government's proposed budget for next year's local education finance grants stands at 78.87 trillion won, up 7.2 trillion won, or 10.1 percent, from this year's original budget of 71.67 trillion won. Compared with the 76.44 trillion won allocated under this year's supplementary budget, however, the increase narrows to just 2.43 trillion won, or 3.2 percent.

The association said that figure is unlikely to keep pace with the natural increase in staff payroll costs next year. According to its estimates, personnel costs for teachers and school staff have risen by an average of more than 2.4 trillion won per year in recent years. Civil servant pay scales and teacher headcounts are set by the central government, leaving education offices with little room to adjust on their own, the association noted.

The association said policymakers must look beyond the grant total and examine how the pool of funding allocated to primary and secondary education is changing in structure. Of the projected 6.4 trillion won in education tax revenue this year, about 2.6 trillion won goes to a special account for early childhood, about 2 trillion won to a special account for higher and lifelong education, and about 1.8 trillion won to local education finance grants for primary and secondary schooling.

Under the government's reform plan, the roughly 1.8 trillion won in education tax currently directed to primary and secondary education would be transferred to the higher and lifelong education special account — effectively eliminating the direct allocation of education tax revenue to primary and secondary schooling, the association said.

The expiration of existing temporary funding sources was also flagged as a burden. The association said about 1.6 trillion won in local education tax tied to tobacco consumption levies, along with fiscal adjustment funds from a fiscal decentralization initiative, are set to expire at the end of this year, and that their termination must be factored into any assessment of the grant increase's real effect.

State support for free high school education is also being reduced. The national government's share of free high school expenses will fall from 30 percent this year to 15 percent next year, according to the association. The current special provision is set to expire at the end of next year, and without a separate extension or funding arrangement, the burden on education offices could grow even further, the association warned.

The association also raised concerns about transfers from local governments and costs tied to national policy initiatives. When legally mandated transfers from some local governments are delayed or withheld, or when non-mandatory transfers such as school meal subsidies are cut, education offices are left to cover the shortfall from their own funds or scale back programs, it said.

Reserve funds meant to cushion fiscal shocks are also shrinking, the association said. "The combined reserve fund balance of education offices nationwide has been declining rapidly from 20.2 trillion won in 2022," it said, adding that "some education offices are even considering issuing local bonds."

Jung Geun-sik, chair of the Korea Superintendents Association and superintendent of the Seoul Metropolitan Office of Education, said assessing the real state of local education finances requires more than looking at the grant increase alone. "The transfer of education tax, the revision of the grant formula, the expiration of existing revenue sources, and changes in national obligations including free high school education must all be examined together," he said.

He added that the government and the National Assembly should "transparently disclose the changes in revenue and expenditure and the fiscal impact for each regional education office so that the effects of the reform can be objectively assessed, and should also prepare medium- and long-term funding measures to ensure the stable operation of education."