128 6 Financing Compulsory Education in Rural Areas: The Development ...
by central and local government according to the ratio of the tuition waiver. In
order to promote balanced development, public funds use a benchmark quota of
primary and secondary schools and the funds are also shared accordingly.
Thirdly, school infrastructure and building was placed on a long term sched-
ule to create a sustained program for improvements in the stock of schools. In the
central and western areas central government assesses the needs for repair and
upgrading of schools every year and provides matching funding in the ratio of 1:1.
In eastern areas this expenditure is a charge on local government. In addition there
is the capacity to make special awards to especially deprived counties.
Fourthly, the New Mechanism strengthened and improved the salary guarantee
system for teachers from rural primary and secondary school. Central government
offers support to teachers’ salary for rural teachers continuously. The intention is
to solve the problems of late payment and under payment that have been wide-
spread in some rural counties.
Thus the New Mechanism has several advantages. Firstly, it clarifies the
responsibility of the provincial government for pooling and planning the fund-
ing as a whole. It formulates the sharing of costs at lower levels and improves the
transfer payments system. Rural primary and secondary schools have set up budg-
eting and expenditure management system, strengthening the financial manage-
ment and improving the monitoring and inspection to improve the efficiency.
Secondly, in including rural compulsory education into public financial secu-
rity, the following items were specified. (i) exempting all the tuition and fees at the
compulsory education stage, providing free textbooks for students in difficulty and
living allowances for boarding students. (ii) Increasing the allocations for recur-
rent fund for primary and secondary schools. (iii) Setting up sustainable mecha-
nism for maintaining school premises. (iv) Consolidating rural teachers’ salary
security mechanism. After implementing the new mechanism, during the Eleventh
Five Year planning period, the funding for rural compulsory education from differ-
ent level of finance have increased by 218 billion yuan, within which 125 billion
yuan 4 was from the central state, and 92.8 billion yuan from local governments.
Thirdly, this reform established a mechanism for sharing between central and
local governments by items and proportion. In the total arrangement, the principle
was that the central state takes the bigger chunk. For exempting tuition and fees
and recurrent funding, the proportion between central and local was 8:2 for the
western part of China, and 6:4 for the middle part. For eastern part, the propor-
tion will be based on the local situation. For reconstruction and maintenance of
school premises, 5:5 for the mid and western part, and in the eastern part mainly
self funded with some central awards. Free textbooks for students in difficulty
are fully funded centrally in the western and middle parts. Living allowances for
boarding students are supported by local governments. This system has meant that
there is now much better matching between financial power and administrative
responsibility.