Revise system, but keep Nuri

Municipal and district education offices have been opposed to funding free day-care services for pre-kindergarteners and some of them have already dropped the program from next year’s budget. Others have scaled back their funding. The scope of the Nuri program, or state-subsidized free day care for children aged 3 to 5, was expanded to include all families regardless of income level in 2013. Some argue that local education offices can afford to save the day-care program if they restructure their spending. We will look at whether the day-care program is affordable in light of the local education offices’ existing budgets.

The government and sovereign education offices across the country are at odds over financing the Nuri public day-care program. From 2015, local education offices will be solely responsible for funding free day care for pre-kindergarteners because the central government will no longer subsidize the program.

The program was designed to offer preschool education and day care to equally prepare children from all families for kindergarten. The idea started in the education sector and the law was passed by the legislature in 2012. Then why are superintendents now refusing to finance the Nuri program? The primary reason is that day care and early childhood education have not been combined and funds at local education offices are expected to run short in 2015. About 2.7 trillion won ($2.5 billion) extra was given in education grants from national coffers in 2013 and those grants will be gone in 2015 by law. To help ease temporary financial problems at local education offices because of reduced grants, the government will purchase 1.9 trillion won of bonds issued by local governments. The debt-sharing, however, is not a lasting solution.

Budgeting in 2016 also will be difficult due to a tax revenue shortfall. What’s imperative is to remove inefficiency in public education finance. The biggest burden to funding education is subsidies that provide free lunches at schools nationwide. School lunches are free regardless of the income of families of students, which means children of high-income classes also get free lunches, which were previously offered only to children from low-income families. In other words, a large portion of the 2.6 trillion won worth of public funding that went toward providing free school lunches this year was for children of families from the middle- and high-income classes who don’t need such assistance. For cost-effectiveness, making free lunches a choice is a better idea than a universal handout. In the long run, suppliers of free lunches will not bother to meet student demand.

Authorities should consider revising the education grant system altogether. Education grants are comprised of 20.27 percent from internal tax revenue and the rest comes from education tax. Subsidies have grown sharply regardless of changes in education. The total number of students is expected to decline by a third by 2020, but education subsidies are estimated to increase 2.7 times. Considering the rising cost for the aging population and constraints in public finance, education grants should be regularly recalculated according to budget conditions.

Local administrations, including education offices, are essential partners in national governance. They play important roles in carrying out and managing a multitude of complicated public policies. Several principles must be kept in order to come up with a win-win fiscal situation. All policies must be made based on a broad agreement. It does not matter to the people whether the accountability lies with the central or local government when they decide whether the services they are getting are worth their tax payments.

And sufficient research is necessary before any policy decisions are carried out to ensure full government cooperation. There needs to be neutral and credible studies on the fiscal consequences of costly welfare programs like free day care or school lunches. Evaluation of current and future public finance at central and local governments should be carried out on a regular basis.

Local governments should be given more authority to draw up policies. More authority for regional administrations would allow programs and services to be tailored to the needs of individual communities. It is important to balance what should be provided universally and individually. Free preschool education was a universal service the state promised and it is wrong to jeopardize the program. We need more open communication.

Translation by the Korea JoongAng Daily staff

*The author is a professor of public administration at Ewha Womans University.