Basic Report

The purpose of this study is to suggest policy directions and alternatives on improvement of education finance in local government operation. As of 2014 the local budget for supporting local education authority occupies 17.9% of total local education finance. The increase in budget support about local education has caused substantial fiscal burden in local government operation and it lead to fiscal pressure and a negative effects regarding fiscal soundness and fiscal sustainability and so on.In fact, the current local education finance is separated from local general finance, so current system is lacking in linkage between local government and local education authority and also this partition type operation makes it difficult to set budget priorities in terms of overall local finance. Second, fiscal accountability and performance improvement is inadequate because of very low level of financially self-reliance. Third, overlapping investment on education project between local government and local education authority brings about inefficiency of local finance management.Therefore the study covers the general and broad perspectives of local education finance, mainly focusing on suggesting policy recommendations required in a linkage and cooperation of education finance and general finance in local government.The composition of this study is as follows: the chapter 2 overviews the theoretical background such as concept, key aspects of education finance and local finance and the chapter 3 examines the reality and the problems of the current financial support to local education authority from local government. In response to the policy direction drawn for improving local education finance, the study in chapter 4 suggests some policy measures as follows:(1) The linkage and cooperation between general finance and education finance should be made in order to resolve fiscal inefficiency and overlap of educational project by separation of general finance and education finance.(2) The budget and accounting and performance management should be enforced through a preliminary review about education budget proposal, in-depth education budget deliberation, effective performance evaluation.(3) The local education finance assist system need to be simplified by integrating a current complicate transfer revenue in relation to local government and local education authority.(4) The financial impact of education support budget need to be systematically managed not to incur fiscal stress and undermine fiscal soundness and sustainability.