The government is establishing a 'Future Response Fund' based on additional tax revenue from the semiconductor boom and is significantly overhauling the local education financial grant system. While this may appear to signal a reduction in primary and secondary education budgets, a closer look reveals that the Ministry of Education has strategically safeguarded its interests.
Through the revised funding formula, all differences arising from the changes will be allocated to a new 'Education and Talent Account' within the fund, securing investment for early childhood, higher education, and lifelong learning, thereby maintaining the total national education investment while broadening the scope to 'education throughout life.'
On August 21, the government held the 'First Financial Operation Strategy Council' at the Government Seoul Building, where it finalized the plans for the Future Response Fund and the grant reform. The most significant change in the grant calculation method will shift from the previous '20.79% of domestic tax' linkage to a new formula: 'previous year's grant × three-year average growth rate × (three-year average change in school-age population × 0.35).'
Initially, financial authorities aimed to reflect a decline in the school-age population of over 40% and completely abolish the domestic tax linkage. However, the Ministry of Education strongly emphasized the inflexibility of personnel costs, which account for over 60% of local education expenditures, successfully reducing the reflection rate to 35%.
Additionally, a 'grant preservation clause' will be codified in the Local Education Financial Grants Act to ensure that if the total grant amount decreases compared to the previous year due to economic downturns, the difference will be fully compensated. This measure provides a robust safeguard against the anticipated 'budget drop' and 'reduction in personnel-related project costs' that local education offices were most concerned about.
One of the most notable aspects is the establishment of the 'Education and Talent Account' within the Future Response Fund. The Ministry of Planning and Finance plans to separately allocate additional tax revenue from the semiconductor boom to invest in four key areas: youth, growth drivers, local development, and education and talent.
In this process, the entire difference arising from the revised grant formula (the amount of domestic tax at 20.79% minus the grant calculated under the new formula) will be legally designated as income for the Education and Talent Account. Notably, transfers to other accounts will be strictly prohibited, ensuring that funds adjusted from the grants do not leak into industrial or general social overhead capital budgets.
Ultimately, while the formula change may seem to alter the grants, it effectively maintains the overall education and talent investment at the level of '20.79% of domestic tax.'
This measure allows the Ministry of Education to expand significant financial resources previously confined to primary and secondary education into areas such as early childhood education (integrated care), university innovation (transition to AX and strengthening research competitiveness), vocational and lifelong education, addressing long-standing financial challenges.
University presidents and lifelong education advocates have consistently called for increased funding for higher and lifelong education, which has lagged behind the OECD average, but have often faced setbacks due to the rigid funding structure of primary and secondary grants. With this reform, the Ministry of Education has secured independent and stable resources to focus on national future challenges, including investment in early childhood education due to integration, nurturing outstanding talent in science and technology, enhancing regional university competitiveness, and promoting adult digital literacy and lifelong education.
Regarding the grant reform, an education sector official stated, 'Rather than clinging to the absolute figure of 20.79% of domestic tax linkage, the decision to fully allocate equivalent resources to the Education and Talent Account to invest from early childhood to lifelong education is a pragmatic choice by the Ministry of Education.' He added, 'In the future legislative process, it is essential to actively incorporate the concerns of education superintendents and educational organizations to find a balance in addressing educational disparities and nurturing future talent.'
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.