130 6 Financing Compulsory Education in Rural Areas: The Development ...
6.3 The Impact of the Reform of Management and Fund
Guarantee System
In the reform of funding system for rural compulsory education, China has moved
from lower centered to higher level centered financial management. In the past
peasants and township took the main responsibilities for compulsory education.
Major adjustments were made after the reform of agricultural taxation and fees in
the 1990s and the responsibilities moved mainly to the county level government.
After the new mechanism was implemented in 2006, provincial pooling and plan-
ning as a whole were introduced, and the county centered management system
was set up. The Central state’s share of funding increased greatly.
6.3.1 Progress in Developing a Durable Public Financial
Guarantee for Rural Education
The “New Mechanism” incorporates rural compulsory education into the envelope
of public financial security because it is regarded as a public good which requires
state intervention. This allows basic education to be free and universally available.
It is supported through many pathways including the “two exemption, one subsidy”
(TEOS) and other innovations which are pro-poor and ease the burden on poor rural
households. Preliminary measurement indicates that the exemption of tuitions and
fees in the central region saved households about 180 yuan per student at primary
level and 230 yuan at junior secondary. In western areas, the average pupil’s reduc-
tion was about 210 yuan at primary and 320 yuan at junior secondary (Yuan 2008 ).
In the survey of Tongzhou, a rural district in Beijing, one of the biggest changes in
educational funding over the last two decades was the increase of government alloca-
tions compared with 1990. In 1989, the total educational fund was 46.7 million yuan,
and various non-governmental fund sources accounted for about 40 % of this amount.
With the implementation of the “New Mechanism”, the non-governmental education
tax was canceled, and the government grant has become the main source of school
expenditure. In our fieldwork in Ansai of Shanxi province in 2010, we found that
almost all of the school-aged children were able to attend and complete basic edu-
cation. Educational expenditure can account for a large proportion of rural families’
cash expenditure. The “two exemption, one subsidy” (TEOS) has reduced the direct
costs of attendance significantly and increased participation and reduced drop out.
6.3.2 Rapid Development in Western Areas
The reforms have accelerated educational development in western areas which has
taken place alongside economic development. Educational expenditure has increased