Although the school-age population is rapidly declining, local education funding continues to automatically increase in line with national tax revenue, prompting a national research institute to call for a review of the education finance distribution system.
According to a report from the Korea Institute of Public Finance on the restructuring of local education funding in the era of declining school-age populations, the current system allocates 20.79% of the total national tax revenue, excluding funds for fire safety, plus a portion of the education tax to local education offices. As tax revenues grow due to economic expansion, funding increases regardless of actual educational demand.
In contrast, the school-age population has been steadily decreasing. The report indicates that the number of elementary and middle school students dropped from about 10.04 million in 1980 to approximately 5.55 million in 2025. Despite this nearly 50% reduction in student numbers, funding linked to national tax revenue has increased, resulting in a rise in per-student funding. The Korea Institute of Public Finance warns that this structure could exacerbate the mismatch between actual educational demand and financial resources.
Concerns have also been raised regarding the utilization of these funds. While the basic costs necessary for school operations have decreased due to the declining student population, the automatically linked funding continues to rise. Consequently, some education offices have been observed directing resources toward cash-based welfare programs or short-term projects that are less directly related to education.
Investment disparities across educational stages have also been highlighted as a reason for discussing funding reform. According to the Organization for Economic Cooperation and Development (OECD), as of 2021, South Korea's public education expenditure per student for elementary and secondary education was approximately $16,700, which is 133% of the OECD average of $12,600. In contrast, higher education funding per student was about $13,500, only 75% of the OECD average of $18,100. This indicates a structure where more resources are allocated to elementary and secondary education compared to higher education.
The Korea Institute of Public Finance examined whether public perception of this structure changes when relevant information is provided. In an online survey experiment conducted in October 2024 with 3,066 adults nationwide, groups that received information on efficiency, international comparisons, and opportunity costs preferred a lower proportion of the education budget by 2.2 to 2.7 percentage points compared to a control group. Among those who received comparative budget information, the percentage of respondents who deemed current education spending excessive increased from about 25% to 35%.
However, the researchers noted that since the measurement was taken immediately after the survey, it is limited in determining actual policy acceptance or long-term attitude changes.
The Korea Institute of Public Finance suggested that rather than merely changing the funding calculation formula, a mechanism for regular review should be established. This would involve creating a non-permanent review committee with participation from the central government, education offices, academia, civil society, and teacher organizations to assess the appropriateness of funding rates, formulas, and weights every three to five years.
Lee Kyung-hoon, a deputy researcher at the Korea Institute of Public Finance, emphasized, "If the review results are published as a public report and the National Assembly and relevant ministries record their acceptance and reasons, it will enhance the transparency and accountability of the system reform."
* This article has been translated by AI.
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