Ge Yanfeng

Research Report No 073, 2004

At present, the fundamental way for compulsory education in rural areas to get out of predicament lies only in an overall readjustment of the responsibility relationship among governments at various levels.

In terms of organization and management of compulsory education, the central government is responsible for outlining the objectives and plans for basic development and for setting out teaching system, contents and criteria in accordance with the Law of Compulsory Education and the other relevant rules and regulations, while the grass-roots governments, particularly the governments at the county level, shall assume the responsibility of implementation and management of teaching program. This system, on the whole, is in conformity with the law of compulsory education and thus should be carried on. What is to be done in the future is to further improve the system. Therefore, the core of the readjustment of the responsibility relationship among governments at various levels must be focused on the input system.

Recently, some people are of the opinion that the central government should increase its input, and there are even loud voices calling on the central government to directly assume the responsibility for the input of compulsory education in poverty-stricken areas. As a matter of fact, however, it is unrealistic for the central government to directly assume the responsibility for the input of compulsory education or to deal directly with the county-level governments in implementing the system of transfer payment. China has a vast area with more than 2,000 counties or county-level cities and hundreds of thousands of primary and middle schools in rural areas. The fundamental information is scattered at grass-roots units, which is neither easy to be collected nor accurate. Because of the asymmetric nature in information, it apparently does not work for the central government to directly assume the responsibility for the input of compulsory education or to deal directly with the county-level governments in implementing the system of transfer payment. In a big country where there are numerous levels of governments, even if the central government has obtained enough accurate fundamental information, it does not conform to the general law of government administration for the central and county-level governments to directly share their responsibilities by bypassing the governments at levels between them, which may easily cause political contradictions in other aspects.

In view of this and the experience of other major powers, a feasible option is to gradually turn the current decentralized input system into a relatively centralized input system.

First of all, the overall responsibility of the provincial governments for the input of compulsory education must be enhanced. Since it is the common responsibilities of the government at various levels to develop compulsory education, there is no exception to the governments at the province level. In addition, there are not only disparities of development from regions to regions in China, but also huge disparities within one province in terms of development. Therefore, it is indeed necessary to enhance the responsibilities of the provincial governments for the input of compulsory education from every perspective whatsoever. Based on the aforesaid analysis, the provincial governments are financially capable of enforcing this kind of responsibility. In consideration of most provinces across the country, the provincial governments are far more powerful financially than the governments at the county level by the standard of the average financial strength as rated on a per capita basis. It will not pose a huge burden to the budget of the provincial governments to raise the proportion of their input for the compulsory education in rural areas. Furthermore, there are not too many governments at the county level under the jurisdiction of a provincial government. Over a long period of time, the financial relations among the governments below the provincial level have directly reached the county level in most provinces, providing a very reliable basis of information and budget. In terms of operation and management in specific cases, it is also feasible to enhance the responsibilities of the provincial governments for the input of compulsory education.

Secondly, the county-level governments must continue to share a proportion of input responsibilities. To enhance the input responsibilities of governments at a higher level and establish a relatively centralized input system does not mean that the county government can rid themselves of the responsibilities in this regard. On the one hand, as grass-roots governments, it is the unshakable and basic responsibility for the county-level governments to organize and develop the fundamental social undertaking, including compulsory education, which is also a basic requirement for independent grass-roots financial units. On the other hand, compulsory education is a social undertaking that must be decentralized, as it involves the construction and maintenance of school buildings, the disbursement of salaries of the school staff, and the daily teaching activities. The financial expenditure contains diversified items and contents. Thus, there exist operational difficulties if the grass-roots governments do not assume their input responsibilities and instead fully relying on the governments at a higher level.

Thirdly, a reasonable mechanism of sharing input responsibilities among governments at various levels must be gradually established. As stated above, there are roughly two kinds of internationally recognized responsibility-sharing models. One is to share input responsibilities on the item-specific basis. The other is to grant fixed-quota subsidies by the governments at a higher level to those at the lower level and even directly to schools based on the average financial expenditure by each student. Relatively speaking, the item-specific responsibility-sharing model highlights more standardized and clearer responsibilities of one another, which also calls for a higher level of budget management. The advantages of the model by granting fixed-quota subsidies based on the average financial expenditure by each student include a less work load and a better utilization of the existing system with counties as the dominating units. The shortcomings are that there is greater room for bargaining. We suggest that by taking a step-by-step strategy, the model of fixed-quota subsidies be adopted at the initial stage of building the system, while the gradual transition to the item-specific responsibility-sharing model be set as the long-term objective. As far as operation is concerned, each province first of all should determine the standard of financial expenditure by each student under the precondition of ensuring the payment of teachers’ salaries, the normal operation of schools and the moderate development of compulsory education in line with the objectives and fundamental requirements of the development of compulsory education. On this basis, the amount of shared quota by the provincial budget may be fixed in accordance with the needs of education development and actual financial strength of each county. Meanwhile, a standardized readjustment mechanism will be established in light of the growth of the county budget and the changes in the number of students and teachers. On this basis, an eventual move to the item-specific sharing model will be achieved with the steady improvement in the budget management.

Fourthly, the central government’s responsibilities for compulsory education should be materialized through the system of general transfer payment to provincial governments. To enhance the responsibilities of the provincial governments and establish a relatively centralized input system does not mean that the central government will not take any economic responsibilities. The central government’s responsibilities should be more demonstrated through the system of general transfer payment to the provincial governments. In other words, by enhancing the general transfer payment, the basic financial capabilities of the provincial governments must be ensured to develop various social undertakings including compulsory education. Considering that there are huge differences among regions in China and with too many accidental factors, the central government can, apart from enhancing the basic capabilities of various localities to ensure the development of compulsory education through the system of general transfer payment, set aside a mall amount of purpose-specific funds to address possible unexpected problems and study and steer the orientation of compulsory education.

May 2004