Is there a possibility of suspending free high school education? ED faces 1.458 trillion additional burden

■ Broadcast: YTN Radio FM 94.5 (09:00-10:00)
■ Host: Reporter Cho Tae-hyun
■ Air date: January 15, 2025 (Wednesday)
■ Talk: Reporter Cho Mi-hyun of the Korea Economic Daily

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information.
◇ Reporter Cho Tae-hyun (hereinafter referred to as Cho Tae-hyun): The compulsory education period in Korea is 6 years in elementary school and 3 years in middle school, a total of 9 years. It is a principle to pay for classes and textbooks directly from high school, but with the implementation of the free high school education system in 2020, high school students were able to attend school for a while without paying for education. And this year, the five-year temporary operation period has ended. The National Assembly passed an amendment to the Local Education Finance Grant Act, which extends the free education period by three years, led by the opposition party, but Deputy Prime Minister Choi Sang-mok vetoed it. Let's look into this today. Reporter Cho Mi-hyun of the Korea Economic Daily, I'm on the phone. Reporter, you're out, right?

◆ Reporter Cho Mi-hyun of the Korea Economic Daily (hereinafter referred to as Cho Mi-hyun): Yes, hello.

◇ Cho Tae-hyun: Yes, how are you? Yesterday, Acting President Choi Sang-mok vetoed the revision of the Local Education Finance Grant Act. Please explain the contents of the bill that exercised the veto first.

◆ Cho Mi-hyun: The revision of the Local Education Finance Grant Act, which Choi vetoed yesterday, requires the central government to pay for free high school education along with municipal and provincial governments. In 2019, the Moon Jae In government implemented free high school education for the first time, and the central government temporarily provided financial support to ease the burden on provincial and provincial offices of education. To tell you the details, the central government paid 47.5% of the high school free education budget. The rest is covered by the provincial education office by 47.5% and local governments by 5%. As of last year, the budget for free high school education was KRW 1.9872 trillion, of which the government and the Office of Education paid KRW 943.9 billion, respectively, and local governments paid KRW 99.4 billion. This budget is used to exempt high school entrance fees, tuition fees, school management support fees, and textbooks. However, the central government's support for free high school education was limited until December 31st last year. This is because, according to the national fiscal principle, state funding should be limited, so if the central government budget is provided to local governments or provincial offices of education, the sunset deadline is set as a special case. As a result, the opposition Democratic Party of Korea alone proposed an amendment to extend support for the central government for three more years and passed the National Assembly plenary session on the 31st of last month, which Choi vetoed yesterday.

◇ Cho Tae-hyun: I'll finish it soon. I think I told you, but it's not this. It's already sunset. The grant law itself is a sunset bill, but as the opposition party said, the large opposition party proposed it alone and passed the bill. What's the background?

◆Jo Mi-hyun: Once the central government's support for free high school education is stopped, the burden on municipal and provincial offices of education will inevitably increase. As mentioned earlier, the city and provincial offices of education should bear all of the more than 1 trillion won budget paid by the central government and local governments. The Democratic Party of Korea should maintain central government support for free high school education because municipal and provincial offices of education spend their budgets on education projects promoted by the Yoon Suk Yeol government, such as reservation integration and the sum of every spring. This is the position. Increasing the financial burden on local governments and municipal and provincial offices of education in free high school education could reduce the budget used to invest in other educational programs or facilities. This could lead to a decrease in the quality of educational services provided to students. On top of that, since free high school education itself is a representative pledge of former President Moon Jae In, the Democratic Party of Korea should continue this policy. It seems that there was this consensus. So, let's extend the central government's support for another three years.

◇ Cho Tae-hyun: According to the original plan, the sunset should have been over at the end of last year, but when we extended it for three more years considering various issues, the bill was passed, and Acting President Choi vetoed it. How do you explain the reason?

◆Jo Mi-hyun: First of all, this amendment was passed without sufficient discussion. In particular, he pointed out that the government proposed an alternative to gradually reduce the share ratio by extending state funding for another three years, but no consultation has been made on this. Choi also said that the government has enough room for the education office to cover the budget for free high school education because the education office has decided to issue 72.3 trillion won this year, up 3.4 trillion won from last year. Even in this situation, if the central government excessively supports additional costs, it will make it difficult for the entire country to manage its finances efficiently and ultimately increase the burden on the people.

◇ Cho Tae-hyun: I don't know if it's because I'm fluttering, but I think both of them have clear logic. But what the government is talking about is that the population is decreasing, and this is also based on it. What does this mean?

◆Jo Mi-hyun: An official from the Ministry of Strategy and Finance said that while the number of people who benefit from the system is decreasing, the only thing that increases finances will be in the education sector. As you know, the total fertility rate has recently fallen to the 0.7 level, and the number of students in the school year is also decreasing. The school-age population of elementary, middle and high schools decreased by more than 1 million in 10 years from 6.16 million in 2015 to 5.11 million this year. The logic is that if the school-age population decreases, the basic cost of school management and education services should also be reduced. As a result, some offices of education carry over or dispose of unused budgets. The problem is that there are not a few cases of idle use of the remaining grants. For example, during the COVID-19 pandemic, some offices of education bought tablet PCs in large quantities as local education financial grants and paid them to students, which became controversial.

◇ Cho Tae-hyun: There were cases where cash was provided at all, so it seems clear that there was a problem with using some of the budget. But the situation in Jungkook is quite unstable and noisy today as well. Do you think this situation has also affected the veto decision?

◆Jo Mi-hyun: I think it would have affected you. Since it is a bill that requires a large budget, I think we had no choice but to be cautious in accepting it in the special situation of an acting system. In addition, there seems to have been a burden on the bill proposed by the opposition party alone, given the emphasis on social consensus. And the biggest bank is also the Minister of Strategy and Finance. Therefore, some analysts say that the decision focused more on financial management. Moreover, with this year's budget already finalized, if the amendment is implemented, the budget must be re-arranged, which may require an extra budget. On the supplementary budget, Choi said, "The top priority is to ensure that this year's budget is implemented properly," and analysts say that the revision may have considered the need for an extra budget.

◇ Cho Tae-hyun: The principle of majority vote should be respected, but it seems that consensus is needed in this regard, but this is also a bit disappointing. In any case, as acting Choi exercised his veto power, the city and provincial offices of education will have a lot of complaints. Can you come in?

◆Jo Mi-hyun: That's right. The city and provincial offices of education strongly protested because they now have to bear additional burdens. Seoul Superintendent of Education Jung Geun-sik said in a statement that the government's cost sharing for free high school education is symbolic, saying that the state is responsible for high school education, and that if it is passed entirely on to local education finances, it is the government's neglect of responsibility for education. At the same time, the Seoul Metropolitan Office of Education said that the additional budget to be borne annually is now worth 185 billion won. The deterioration of the education office's finances will result in the deterioration of the educational conditions of Seoul students. That's what I said. Choi Kyo-jin, superintendent of Sejong City, wrote on social media about Choi's veto, saying he is concerned that it will not only make the education finance management of the nation's provincial offices of education unstable but also lead to a crippling education policy.

◇ Cho Tae-hyun: It's a very complicated problem. What we've been able to grow so far is that we've been able to grow by reinvesting financial resources from economic growth into education, but I think it's a difficult problem. This will be credited to the National Assembly again, and if the National Assembly does not get more than two-thirds of the approval after the National Assembly vetoes it, will the Office of Education have to pay for all the financial resources of free education?

◆Jo Mi-hyun: That's right. As you said, the National Assembly needs more than two-thirds of the registered members to re-decide a bill in which the president's veto was exercised. If the amendment is not passed by the National Assembly after a re-decision, the state funding will end according to the existing legislation. In this case, the provincial office of education should be responsible for the full budget for free high school education. The financial shortfall required for free high school education should be prepared by each office of education's reserve funds or readjustment of the project budget. However, the policy itself is not interrupted because free high school education has already been legislated by the Elementary and Secondary Education Act. However, since a significant amount of the education office's finances have to be invested in free high school education, the budget for other education projects will be reduced. In particular, local education offices with low financial independence may have greater difficulty in funding free high school education.

◇ Cho Tae-hyun: Well, it must be different from province to province. Then, I think we need to look at how much is required for free high school education and how much each ministry decided to share. How much is it?

◆Jo Mi-hyun: According to the Ministry of Education, the total budget for free high school education this year is KRW 1.992 trillion. Among them, the central government has set aside 946.2 billion won and the local government has set aside 99.6 billion won. If the bill is rejected after a re-vote by the National Assembly, provincial and provincial offices of education will have to pay an additional 1.458 trillion won.

◇ Cho Tae-hyun: We have to pay more than 1 trillion won extra. Can you handle this now?

◆Jo Mi-hyun: First of all, the local education finance grant to be issued this year is KRW 72.3 trillion, which is an increase of KRW 3.4 trillion from last year. So, as I said earlier, the government is in the position that each city and provincial education office can pay for free high school education because the school-age population is decreasing and local education financial grants have increased. In addition, the provincial education office holds the remaining budget as a local education financial grant in the form of a reserve fund, which amounts to trillions of won. In addition, 43.99% of the tobacco consumption tax is transferred to local education tax, which is designated as a budget for the provincial office of education. The government's position is that if these things are combined, about 1 trillion won in free high school education can be fully appreciated.

◇ Cho Tae-hyun: The government sees it that way. I heard that there is also a fund reserve called the Office of Education's concept of emergency funds, but is this a situation where you can afford it now?

◆Jo Mi-hyun: As you said, funds such as the Integrated Financial Stabilization Fund and the Educational Facilities Environment Improvement Fund are large enough to reach trillions of won. However, we have to consider whether there is actually room. For example, the Integrated Financial Stabilization Fund is a reserve fund for emergencies and is used in financial uncertainty or crisis situations. And in the case of the educational facility environment improvement fund, it is used to improve the educational environment, such as improving school facilities and maintaining safety inspections. The education offices argue that converting the accumulated funds to other uses can disrupt other businesses because they are already allocated funds for emergency situations or under long-term plans. It is necessary to consider how much of the accumulated funds can be converted immediately.

◇ Cho Tae-hyun: Okay. I think we need to consider this as well. However, I think these funds have their original purpose and purpose, but I think we should also point out whether it is okay to draw and spend money like this because it is urgent, or if other problems arise when these funds are depleted.

◆Jo Mi-hyun: Yes, first of all, funds are accumulated for a specific purpose, so there are legal restrictions when using them other than those for that purpose. So maybe you need a legal basis to put this into free high school education. In addition, the tobacco consumption tax and local education tax are now expected to reduce existing projects if they are put into free high school education.

◇ Cho Tae-hyun: There may be problems in that aspect. There may be side effects, but first of all, the government's position is possible, but I don't think the Office of Education's opinion is. What does the education office say?

◆Jo Mi-hyun: The finances of the Office of Education continue to deteriorate in the Yes Office of Education. This is the position. According to last year's comprehensive report on local education finance analysis released by the Ministry of Education, the integrated fiscal balance of education offices nationwide turned into a deficit in 2023 for the first time in three years. As such, the financial situation of education offices nationwide is deteriorating. In particular, the local education office, which has low financial independence, argues that it may be difficult to maintain a basic educational environment if the fund covers free high school education.

◇ Cho Tae-hyun: Okay. The government and the education offices seem to have mixed positions, but I think we need to carefully examine whether there is a problem. Even if the Office of Education says it will support free high school education by bringing in other financial resources for a year, I think it will be a problem in the future. Now that we're back in the National Assembly, the ruling and opposition parties should discuss it at the National Assembly. What are the prospects?

◆Jo Mi-hyun: It would be nice to collect the middle ground, but as the ruling and opposition parties are currently facing extreme confrontation, it remains to be seen whether they will reach an agreement easily. As Choi mentioned, there is a possibility of discussing ways to gradually reduce the ratio of state funding. Efforts should be made to find a compromise that reflects some of the ruling party's claims to reduce state funding but maintains the existing ratio for a certain period of time by accepting the opposition's demands. Anyway, the fiscal soundness and education that the government's ruling party and opposition party emphasize each other are all important to future generations. So, I hope that the ruling and opposition parties will face off regardless of their political interests this time.

◇ Cho Tae-hyun: Okay. But if we assume that the bill will be re-voted under the leadership of the opposition party, how should we look at the outlook?

◆ Cho Mi-hyun: If the bill is re-voted under the leadership of the opposition party, as I said, at the plenary session of the National Assembly, more than two-thirds of the registered members must be approved, but if there is no more than eight votes from the power of the ruling party, the bill will be scrapped. Therefore, it seems unlikely that the ruling party, which asked Acting President Choi to exercise his veto power, will vote for departure. If the National Assembly fails to reach an agreement or the deadlock between the ruling and opposition parties over the financial burden continues, the possibility of reducing or abolishing free high school education cannot be ruled out.

◇ Cho Tae-hyun: It's very difficult. Politics is a means of distributing values authoritatively. Because it is like the art of negotiations, I hope that the ruling and opposition parties will not only continue such an extreme confrontation, but also agree and discuss such important areas. So far, we have talked about various related stories with reporter Cho Mi-hyun of the Korea Economic Daily. Reporter, thank you for today's comment.

◆Jo Mi-hyun: Yes. Thank you.

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