An Evaluation and Challenges of Local Education Finance Since the 5.31 Education Reform

The purpose of this article, marking the 30th anniversary of the 5.31 Education Reform, aims to historically review the changes in local education finance over the past three decades and to provide a multi-faceted diagnosis of its outcomes and challenges. For this purpose, the study employs an analytical framework based on five core values of education finance—stability, adequacy, equity, autonomy, and efficiency—applied across the fiscal stages of revenue generation, allocation, and operation. The analysis reveals that since the 5.31 Education Reform, local education finance has achieved remarkable quantitative growth, such as in per-student public expenditure, driven by the system linking its funding to a fixed percentage of national tax revenue. However, an evaluation based on the core principles of its operation reveals significant challenges. First, in terms of stability, despite its legal foundation, the system's actual stability has been undermined by inaccurate government tax revenue forecasts and a rigid settlement system, leading to severe annual fluctuations in funding. Second, regarding adequacy, while macro-level indicators appear favorable, there are structural limitations stemming from the practice of 'spending based on revenue', rather than actual educational needs, and issues with funds not being sufficiently delivered to the school level. Third, in terms of equity, while a high level of horizontal equity among regions has been achieved, vertical equity, which considers the diverse needs of disadvantaged students, remains insufficient. Fourth, concerning autonomy, the principle of lump-sum allocation has been weakened by an excessive number of budget measurement items, eroding the ideal of local educational autonomy. Finally, regarding efficiency, external debates over excessive unused funds and reserves, along with the fiscal imbalance between K-12 and higher education, were identified as critical challenges for the future.