A study on the estimation method of fiscal needs in local education grants

This paper analyses that the estimation method of fiscal needs in local education grants is arbitrary and inconsistent. And it suggests the effect of this estimation method on the distribution of fiscal needs among local education agencies. In particular, this paper systematically and logically analyses the inconsistency in estimating the fiscal needs and the distribution gap among local education agencies through mathematical model for the estimation method of the fiscal needs. And this paper verifies the analysis results using local education grants data. Mathematical model for the fiscal needs estimation method reveals that the Ministry of Education does not determine the unit cost and adjustment rate based on education demand-related data, but rather arbitrarily chooses only one between a myriad of unit costs and adjustment rates that match the total amount of ordinary grants and financial shortages. And it logically analyses how the fiscal needs estimation method leads to a gap in the distribution of fiscal needs among local education agencies. The analysis using local education grants data verifies that the unit cost and adjustment rate of school expenses, class expenses, and student expenses were inconsistent, and the final unit price of balanced education between regions and classes was inconsistent. It also confirms that if the Ministry of Education determines a specific demand item at a higher value, it will give preferential treatment to local education agency, which has a high proportion of the demand item.