6 Out of 10 Citizens Support Reform of Education Grants After Learning About Sharp Drop in Student Numbers and 20.79% National Tax Link

August 18 Issue of "Monthly Fiscal Forum" Highlights Grant Reform in Era of Declining School-age Population

Survey of 3,066 Adults Aged 19 to 64 Conducted

Preference for Reform Rises as Public Gains More Information on Education Finance

A recent study found that 6 out of 10 people supported a reform of the allocation formula for local education finance grants after learning about the automatic increase structure linked to national tax revenue and the rapid decline in the school-age population. As more objective information about education finance is provided, public opinion in favor of revising the existing system has grown.

On the 8th, in front of the Seoul Government Complex in Jongno-gu, Paek Younghwan, the chairman of the Korean Teachers and Education Workers Union, is speaking at a joint press conference held by three teacher organizations including the Korean Teachers and Education Workers Union, the Federation of Teachers' Unions, and the Korean Federation of Teachers' Associations. Yonhap News Agency

Lee Kyunghoon, Associate Research Fellow at the Korea Institute of Public Finance, presented this analysis in the August 18 issue of the "Monthly Fiscal Forum" in his article "Reform of Local Education Finance Grants in the Era of Declining School-Age Population: Implications of an Information-Providing Survey Experiment." Currently, local education finance grants are automatically allocated to metropolitan and provincial offices of education based on 20.79% of the total national tax revenue and a portion of the education tax. The number of primary, middle, and high school students fell from 10.04 million in 1980 to 5.55 million projected in 2025, representing a nearly 50% decrease over approximately 45 years. If the current system is maintained, per-student grants for primary, middle, and high school students are expected to increase from 12.14 million won in 2024 to 66.77 million won by 2060.

The research team conducted a survey experiment with 3,066 adults aged 19 to 64. Respondents were provided with different types of information, such as trends in the school-age population, international comparisons of education spending, and the scale of education budgets compared to other sectors, then their opinions on the grant reform were tracked. 44% of respondents said they had "never heard of" local education finance grants. However, after being informed about the sharp decline in the school-age population and the fact that spending on primary and secondary education in Korea exceeds the OECD average, public sentiment changed. The proportion supporting the abolition of the current formula, which is fixed to national tax revenue, in favor of linking the calculation to the number of students and actual demand for education, rose from 53.0% to 60.0%, a 7 percentage point increase. This rate approached the 68.2% support level among fiscal experts.

Hongkeun Park, Minister of Strategy and Finance (left), and Kyojin Choi, Minister of Education, are attending and conversing at a public discussion on the reorganization of local education finance grants held on the 8th at the Government Complex Seoul in Jongno-gu, Seoul. Photo by Yonhap News Agency

The amount people thought should be allocated to the education budget also changed after receiving information. In all groups provided with three types of information, the desired proportion of education in the national budget fell by 2.2 to 2.7 percentage points from previous levels. Especially in the group that was shown a comparison of the education budget with those of other sectors such as defense and welfare, the percentage evaluating current education spending as "excessive" rose by 10 percentage points, from 25% to 35%. In the group informed that per-student public spending on primary and secondary education is at 133% of the OECD average, while higher education is only at 75%, support for expanding higher education increased by 8 percentage points. In the group shown data on the decline in the school-age population and the trend of aging, the share supporting reallocating resources to areas such as welfare increased by 5 percentage points.

The report recommended adopting a "demand-responsive hybrid formula" for calculating educational grants, which takes into account both nominal GDP growth and changes in the ratio of the school-age population. It also proposed the creation of a "non-permanent review consultative body" composed of about nine government and civilian members to review the adequacy of the allocation rate and formula every 3 to 5 years.

Associate Research Fellow Lee Kyunghoon said, "Education finance is a field that most people have supported based on the value judgment that 'education is an investment in the future.' When citizens could easily understand key information about education finance, their preferences regarding the grant calculation method became more responsive to actual demand. This shows that the debate over grant reform is not merely a technical matter, but also one of public awareness and democratic legitimacy."

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