The Ministry of Planning and Budget plans to revise the formula for the Local Education Grant, shifting from the current method linked to internal taxes to one tied to the nominal growth rate (real growth rate plus inflation). The decision reflects the view that fiscal efficiency is being undermined as the grant — which automatically allocates 20.79% of internal taxes — has expanded sharply despite a steep decline in the student population. The overhaul of the education grant system, introduced in 1972, comes 54 years late but is nonetheless welcome. The Fiscal Management Strategy Committee, set to launch in July, will take up the education grant as a core agenda item. This time, the effort must move beyond rhetoric and produce tangible results.
The flaws of the education grant are nothing new. The grant grew from approximately 39 trillion won in 2015 to 70.2 trillion won in 2025, nearly doubling in a decade. Over the same period, the student population fell 22%, from 6.38 million to 5.02 million. This year, the grant is projected to exceed 76 trillion won following a supplementary budget, and an additional 20 trillion won is expected next year as corporate and income tax revenues rise on the back of a semiconductor boom. The government's failure to address this irrational system amounts to a dereliction of duty. As the grant has swelled beyond what local education offices can manage, a "spend it while you have it" mentality has taken hold. Among the candidates running in the June 3 local elections for superintendent posts in 16 metropolitan cities and provinces, cash or local currency handouts of 100,000 to 1 million won have become standard pledges. One candidate has even promised to create a fund of up to 50 million won by matching parental contributions with education office budgets. It is a dismal reality in which the education grant has been reduced to a tool for buying votes.
Against this backdrop, Planning and Budget Minister Park Hong-keun's signal of reform — pledging to "seek alternatives through national public debate" — is encouraging. Resistance from some ministries and interest groups will be considerable, but the reality of the education grant being squandered as if it were a bottomless purse cannot be left unaddressed. Since the grant's allocation ratio and formula are matters requiring legislation, the government and the National Assembly must seek effective reform measures by gathering expert input through public hearings and similar channels. Follow-up plans must also be carefully designed so that resources freed up through reform can be channeled into productive areas such as cultivating talent for advanced industries and building educational infrastructure.
