134 6 Financing Compulsory Education in Rural Areas: The Development ...
undertaken. The Central state is still limited in its capacity to provide revenue to
urgent or newly emerged gaps in development rather than a complete and regular
system. Thus the “New Mechanism” falls short of providing sufficient funding for
growth since the formula used does not take into account future demand. This is
a problem especially for personnel expenditure which accounts for 80 percent of
total education expenditure and is still paid by county-level government.
In terms of school management systems in rural areas, most of the funding goes
to the central primary school. Other complete or incomplete schools under the
management of central school have no power over finance and often are less well
funded than the central school. The disparity between central schools and other
types of schools are quite obvious.
6.4.3 Teachers Salaries
The salary guarantee for rural compulsory primary and secondary teachers has not
been fully incorporated in the “New Mechanism” and the salaries of rural teach-
ers are still the responsibility of county-level government. They are therefore vul-
nerable to local variations in economic conditions. Although the government has
standards in allowances for teachers in charge of classes, teaching periods allow-
ances, and other benefits, they are likely to be reduced at local level. For example,
teachers have an extra month salary, but in many rural schools the extra month
salary is normally kept by schools as a performance related bonus for teachers.
There are risks that with the “New Mechanism” that prohibits various fees, the
actual income of rural teachers will fall though it will be cheaper for students to
attend (Yu 2007 ). The income of rural primary and secondary school teachers has
improved but is not high. Teachers have no special social security arrangement in
rural areas. Neither are the salaries of substitute teachers incorporated in the scope
of guarantee system despite the fact that some are long serving and rated highly,
and this despite repeated efforts to abolish the category.
6.4.4 Unclear Accountability, Crowding Out and Fund
Adequacy
Three issues stand out as problematic for accountability. First transfer payments
may not be supervised effectively. Xue and Ding ( 2009 ) undertook field investiga-
tions in two provinces and ten counties in the eastern region on the education fund
guarantee system in rural compulsory education. This revealed that in the public
schools in Hubei and Shanxi province, funds for waiving tuition and fees, and the
public fund allocation and subsidy for living allowances to poor students residing
on campus, often failed to reach the designated institutions. Some public schools
continued to charge tuition and fees to students after the implementation of “New