125withheld or misappropriated. Funding could only be used for prescribed purposes,
income and expenditure should be audited and published regularly, and the issuing
of bonds to finance schools was banned. Lastly pairing and partnership arrange-
ments were encouraged to reduce inequalities. This involved developing the “east-
ern counterpart support for western poverty-stricken areas school project” and
“The project of large and medium-sized cities school counterpart support to local
schools in poverty-stricken areas”.
The core of county centered management system of rural compulsory educa-
tion was that the county government took the major responsibilities on rural
compulsory education. It has changed from township centered and fund raising
from peasants to county government to take the operational responsibilities for
running and managing rural compulsory education. The funding on basic educa-
tion was included in county budget and had established the funding guaranteeing
system for rural compulsory education. Teachers’ salary was paid by the county.
Provincial government determined the standards and norms for recurrent funds
for rural schools and counties arranged the allocation. The central and provincial
governments increased support to rural education of poor counties through transfer
payments, arranging special funds for transformation of dangerous buildings and
construction of new premises.
The “County centered” reform of rural compulsory education was packaged
with Rural Tax and Fee Reform. In 2001, the State Council issued “Notification
on Pilot Work of Rural Tax and Fee Reform”. The major contents of the reform
included “Canceling township revenue on education, family planning, road
etc. Canceling the fees collected from peasants, institutional and governmental
organization, suspending the butcher tax, decreasing and gradually suspending
obligatory labor, and adjusting agricultural taxes and policy on tax of agricultural
specialties.
Rural Tax and Fee Reform came into effect in Anhui province in 2000, reached
20 provinces and autonomous regions by 2002, and was extended to all parts
of China except Tibet by 2003. Rural Tax and Fee Reform started in 2001 and
suspended educational taxes at local level in favor of county level funding to all
schools against a background of more general reform of rural taxation. The most
important effect of this Rural Tax and Fee Reform on rural compulsory education
was cancelling the fees from peasants used as additional educational fees and fund
raising. This was significant for the development of rural compulsory education
since it broke the fundamental structure of financing and investment in rural com-
pulsory education. The system changed from one that mainly depended on addi-
tional educational taxes and levies on farmers, to one that depended on a system of
government financial allocation (Gao 2004a, b).
From 2003, the state council reinforced its decision to strengthen rural educa-
tion through the reforms it had introduced. County-level governments now took
the lead in taking responsibility for educational development supported by trans-
fer payments from Provincial governments targeted on the poorest counties backed
by checks to ratify the appropriate use of additional funds. The commitment was
to increase investment in compulsory education. Funds for rural compulsory