South Korea to reform education funding after 55 years, but concerns over quality remain

South Korea is overhauling its system for allocating local education funds, a structure that has been in place for 55 years. The government announced it will move away from automatically allocating 20.79% of national tax revenue to provincial and city education offices. Instead, starting next year, the funding will be calculated based on the previous year's allocation, adjusted by the average growth rate of the economy over the last three years and changes in the school-age population.

The new formula will consider the declining school-age population but will only reflect 35% of this decrease, acknowledging that personnel costs, which make up 60% of education office expenditures, continue to rise. The government also plans to include a principle in the Local Education Grant Act to compensate for any shortfall if the total amount calculated under the new formula falls below the previous year's total. The difference between the current and new calculation methods, estimated at around 20 trillion won (approximately $14.5 billion), will be channeled into a new "Education and Talent" account within the Future Response Fund. This account is designated for early childhood, higher, and lifelong education, as well as attracting top talent, aiming to address an imbalance where South Korea's investment in primary and secondary education is 166% of the OECD average, while higher education investment is only 69%.

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The government will abolish the structure linking local education finances to national tax revenue for the first time in 55 years.

However, the education sector has voiced strong opposition, arguing that the new funding formula will be insufficient to meet future educational demands, such as AI education and facility upgrades. They worry that if the economy enters a long-term low-growth phase after a semiconductor boom, the average annual increase in education grants under the new system could fall below the rate of increase in fixed costs like personnel and facility maintenance. This could shrink the portion of the budget available for actual educational programs. The government's decision to reform the system without sufficient consultation with education groups has fueled this backlash, prompting calls for the National Assembly to carefully review the changes and establish safeguards to prevent a decline in educational quality.

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The education sector's concerns about a decline in educational quality must be thoroughly examined during the National Assembly's review process.