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LOCAL EDUCATION FINANCE SUBSIDY ACT

[Enforcement Date: Feb. 29, 2008] [Act No. 8852, Feb. 29, 2008, Other Laws and Regulations Amended]

Ministry of Education, Science and Technology (Digital Local Education Finance Team) Tel.: 02-2100-6530

Article 1 (Purpose)

The purpose of this Act is to contribute to the balanced development of education as the State grants the whole or part of the funds necessary for the establishment and administration of educational institutions and educational administrative institutions (including their affiliated organizations; hereinafter the same shall apply) by the local government.

Article 2 (Definitions)

The definitions of terms used in this Act shall be as follows:

1. The term "amount of the standard financial demand" means the amount of the financial demand for local education and its administrative operation, which is estimated by the provisions of Article 6;

2. The term "amount of the standard financial revenue" means the amount of all of the financial revenue with respect to education, science, technology, physical education, and other academic sciences (hereinafter referred to as the "education and academic sciences") which is estimated according to the provisions of Article 7;

3. The term "unit of measurement" means the unit by which the amount of each department is measured after the local educational administration is divided into departments; and

4. The term "expense per unit" means the amount per unit for each unit of measurement in order to estimate the amount of the standard financial demand. Article 3 (Types and Financial Resources of Subsidies )

(1) The subsidies which the State grants to local governments for the purposes as prescribed in Article 1 (hereinafter referred to as the "subsidies") shall be divided into general subsidies and special subsidies.

(2) The financial resources of subsidies shall be the sum of the amount under each of the following subsections:

1.

2. The amount equivalent to 20/100 of the total of the internal taxes in the relevant year (excluding the object tax, gross real estate tax and the relevant amount of tax items to be used for financial resources of the special account pursuant to other Acts; hereinafter the same shall apply); and

3. The amount equivalent to the total revenue of the education tax in the relevant year as prescribed in the Education Tax Act.

(3) The financial resources of the general subsidies shall be the sum of the amount as prescribed in section (2) 3 and the amount equivalent to 96/100 of the amount as prescribed in section (2) 2, and the financial resources of special subsidies shall be the amount equivalent to 4/100 of the amount as prescribed in section (2) 2.

(4)

Article 4 (Revision of Subsidy Rates)

(1) When there are any considerable fluctuations in the demand for personnel expenses in the local educational finance due to inevitable causes, such as increase or decrease of teachers, in compulsory educational institutions, the State shall revise the subsidy rates prescribed by Article 3 (2) 2 upon taking into account the increases, etc. in subsidies ensuing from increases in internal taxes.

(2) In the event that the subsidy rates are to be revised in accordance with the provisions of section (1), matters necessary for the methods of subsidy, etc. shall be prescribed by Presidential Decree.

[This Article Newly Inserted by Act No. 7251, Dec. 30, 2004] Article 5 (Granting General Subsidies)

(1) The Minister of Education, Science and Technology (hereinafter referred to as the "Minister") shall grant the general subsidies in its total amount to the local government whose amount of the standard financial revenue is short of the amount of the standard financial demand, on the basis of the amount of such shortage.

(2) In the event that the Minister intends to grant the general subsidies in accordance with the provisions of section (1), he/she shall notify such decision of the said grants to the heads of educational administrative institutions of the competent Special Metropolitan City, Metropolitan Cities, Dos and Special Self-Governing Province (hereinafter referred to as the "City/Do"). In this case, the Minister shall prepare the basis of computation of general subsidies, particulars for each local government and related data, and forward them to the heads of educational administrative institutions of each City/Do.

[This Article Wholly Amended by Act No. 7251, Dec. 30, 2004] Article 5-2 (Granting Special Subsidies)

(1) The Minister shall grant the special subsidies in accordance with the classification stated in the following subsections: Provided, that in the case where any remainder is expected after using the amount as referred to in subsection 3, the Minister may use it for the financial resources of financial support to the local government which has an excellent record of operating the local educational administration and local educational finance:

1. Where there is a special financial demand to support by formulating a separate financial support plan as the national policy project related to the education to be performed throughout the nation as prescribed in Article 58 of the Local Finance Act: amount equivalent to 60/100 of the financial resource of special subsidies;

2. Where there is a special pending demand for local education which is impossible to meet by the method of computing the amount of standard financial demand: Amount equivalent to 30/100 of the financial resource of special subsidies; and

3. Where there is a special financial demand or a decrease of financial revenue due to a disaster occurring after the deadline of computing the general subsidies: Amount equivalent to 10/100 of the financial resource of special subsidies. (2) In the event that the heads of the educational administrative institutions of the City/Do file applications for special subsidies due to the occurrence of causes applicable to any of section (1) 2 and 3, the Minister shall examine them and grant the subsidies. Where the causes applicable to section (1) 1 occur or where the Minister deems it necessary, the special subsidies may be granted by setting a specific standard, even if there is no application therefor. (3) Conditions may be attached or usages may be restricted for using the special subsidies as prescribed in section (1).

(4) When the heads of the educational administrative institutions of the City/Do intend to use the special subsidies by changing the conditions or usages as prescribed in section (3), they shall obtain in advance approval from the Minister.

(5) In the event that the heads of the educational administrative institutions of the City/Do use the special subsidies in violation of the conditions or usages as prescribed in section (3) or fail to use them for not less than two years, the Minister may order them to return the subsidies or subtract them from the special subsidies to be granted subsequently.

(6) Matters necessary for the procedures, such as the criteria for choosing excellent local governments as referred to in the proviso of section (1), selection method, and the time of granting the special subsidies, shall be prescribed by Presidential Decree. [This Article Newly Inserted by Act No. 7251, Dec. 30, 2004] Article 6 (Amount of Standard Financial Demand)

(1) The amount of the standard financial demand shall be the sum of the products of multiplying the expense per unit by the number of measurement unit by each measurement item.

(2) The measurement items and the measurement unit shall be prescribed by Presidential Decree, and the expense per unit shall be determined by the Ordinance of the Ministry of Education, Science and Technology within the limit of standards prescribed by Presidential Decree, taking into account the fluctuations in the price index, etc. Article 7 (Amount of Standard Financial Revenue)

(1) The amount of standard financial revenue shall be the expected amount of revenue of the special account of education expenses of local governments related to the education and academic sciences such as the transferred money from the general account as prescribed in Article 11.

(2) Expected amount of income and the financial resource which are local taxes from the expected amount of income as prescribed in section (1), shall be the amount computed by the standard tax rates as prescribed in Article 1 (1) 4-2 of the Local Tax Act, and the difference between the computed amount and the settlement amount shall be settled when the standard finance revenue of the year after the next year is computed, and the method of computation of other expected amounts shall be as prescribed by Presidential Decree.

[This Article Wholly Amended by Act No. 7251, Dec. 30, 2004] Article 8 (Adjustment of Subsidies, etc.)

(1) In the event that the subsidies have been unjustly granted due to mistakes or falsity of data required for computation thereof, the Minister shall subtract the amount equivalent to the portion that exceeds the amount of subsidies legally receivable by the relevant City/Do from the subsidies to be granted subsequently. (2) When the local governments have disbursed considerably excessive expenses in violation of the provisions of the laws and regulations, or neglected to collect the revenues to be secured, the Minister may reduce the subsidies to be granted to the respective local government or order it to return a part of already paid subsidies. In this case, the amount of subsidies to be reduced or ordered to be returned shall not exceed the amount that has been disbursed in violation of the provisions of the laws and regulations, or neglected to be collected. [This Article Wholly Amended by Act No. 7251, Dec. 30, 2004] Article 9 (Appropriation in Budget)

(1) The State shall appropriate the subsidies as prescribed in this Act in the national budget every fiscal year.

(2) In the event that there is any increase or decrease in the internal taxes owing to the revised supplementary budget, the subsidies shall also be increased or decreased accordingly. (3) The difference of subsidies due to the difference between the amount of the internal tax budget and the amount of the settled accounts shall be adjusted by appropriating it in the national budget of the year after the next year at the latest.

Article 10 (Measures Following Change, etc. of Administrative Districts) In the event that Cities/Dos are abolished, divided, or merged, or the jurisdictional areas of the Cities/Dos are changed, the Minister shall adjust the subsidies for the respective Cities/Dos in accordance with the Presidential Decree, and grant the adjusted subsidies to them.

[This Article Wholly Amended by Act No. 4303, Dec. 31, 1990] Article 11 (Bearing of Local Government)

(1) The expenses needed by the City/Do for education and academic sciences shall be borne by the special account for educational expenses of the local government concerned, on the condition that those needed for compulsory education shall be appropriated by the subsidies from the financial resources of the special account for educational expenses and the transferred money from the general account as referred to in section (2), and the expenses related to education other than the compulsory education shall be appropriated by the subsidies from the financial resources of the special account for educational expenses, the transferred money from the general account as prescribed in section (2), tuition fees and entrance fees, etc. (2) The Cities/Dos shall appropriate the following amounts to the budget of the general account of every fiscal year for the establishment and operation of public schools and improvement of educational environments, and transfer them to the special account for educational expenses. The same shall apply where there is any increase or decrease due to the revised supplementary budget:

1. The amount equivalent to the local educational taxes as prescribed in Article 260-3 of the Local Tax Act;

2. The amount equivalent to 45/100 of the tobacco consumption taxes (excluding Dos); and

3. The Seoul Special Metropolitan City shall appropriate 10/100 of the total amount of the special metropolitan city taxes (excluding the amount equivalent to the object tax as referred to in Article 6 (1) 2 of the Local Tax Act and the property tax for the Special Metropolitan City as referred to in Article 6-2 of the same Act); the Metropolitan Cities and Gyeonggi-Do shall appropriate the amount equivalent to 5/100 of the total amount of the metropolitan city taxes or Do taxes (excluding the amount equivalent to the object tax as referred to in Article 6 (2) 2 of the Local Tax Act); and other Dos and Special Self-Governing Province shall appropriate the amount equivalent to 36/1,000 of the total amount of the Do taxes or Special Self-Governing Province taxes. (3) The difference of money transferred out due to the difference between the budget amount and the settled account shall be settled by appropriating it no later than in the budget of the year after the next year. (4) When the head of the educational administrative institution of the City/Do draws up the expenditure budget which is to be appropriated as the transferred money from the general account as prescribed in sections (2) and (3), he/she shall consult in advance with the head of the local government concerned.

(5) Where the education committee of the City/Do intends to reduce the expenditure budget drawn up pursuant to the provisions of section (4), it shall consult in advance with the relevant heads of the educational administrative institution and the local government. (6) The local governments (Cities/Dos and cities/Guns/autonomous Gus) may provide financial support for the educational expenses needed for various levels of schools equivalent to or lower than high schools under their jurisdictions according to the conditions as prescribed by Presidential Decree. (7) The City/Do may transfer the separate expenses other than each subsection of section (2) to the special account of educational expenses, for the promotion of education and academic sciences within its jurisdictional areas. [This Article Wholly Amended by Act No. 3561, Apr. 3, 1982] Article 12 (Report on General Subsidies)

The Minister shall make a report on the criteria for allotment, particulars of allotment, amount of allotment of the general subsidies and other important matters necessary for the operation of general subsidies to the competent Standing Committee of the National Assembly by not later than March 31 every year.

[This Article Wholly Amended by Act No. 7251, Dec. 30, 2004] Article 13 (Raising Objection to Subsidies, etc.) (1) Where the heads of the educational administrative institutions of Cities/Dos have received a notice of decisions on the general subsides pursuant to the provisions of Article 5 (2), if they have any objection to the basis of computation of the amount of subsidies, etc. of the local government concerned, they may raise an objection to the Minister within 30 days from the date of receiving such notice. (2) In the event that the Minister has received an objection pursuant to the provisions of section (1), he/she shall examine it and notify the result thereof to the heads of educational administrative institutions of the local government concerned within 30 days from the date of receiving the said objection. [This Article Newly Inserted by Act No. 7251, Dec. 30, 2004] ADDENDA (Government Organization Act) Article 1 (Enforcement Date)

This Act shall enter into effect on the date of its promulgation. Provided, that , amended part of Acts, which are promulgated before this Act enters into effect, and the enforcement date of which has not yet arrived, among the Acts to be amended in accordance with Article 6 of Addenda, shall enter into effect on the respective enforcement date of each relevant Act.

Articles 2 through 5 Omitted.

Article 6 (Amendment of Other Acts)

(1) through <96> Omitted.

<97> Part of the Local Educational Finance Subsidy Act shall be amended as follows: The term "Minister of Education and Human Resources Development" in Article 5 (1), the first and latter parts of Article 5 (2), Article 5-2 (4) and (5), section (1) and the first part of section (2) of Article 8, Article 12, and Article 13 (1) and (2) shall be changed to "Minister of Education, Science and Technology".

The term "Ordinance of the Ministry of Education and Human Resources Development" in Article 6 (2) shall be changed to "Ordinance of the Ministry of Education, Science and Technology".

The term "Minister of Education and Human Resources Development" shall be changed to "Minister of Education, Science and Technology".

<98> through <760> Omitted.

Article 7 Omitted.