136 6 Financing Compulsory Education in Rural Areas: The Development ...
be mainly provided by the state and the state should be responsible for the fund
raising for implement basic education. As the basic part of education system, com-
pulsory education is the foundation of the whole education system and is a pub-
lic good. Central state should take substantial responsibility for rural education.
Delegating responsibility to local level should be accompanied by financial power
as well. “Local level” is a general concept in China, it needs to be viewed analyti-
cally. Under the new strategy of balanced development of compulsory education,
provincial level should play the major role in narrowing the regional gaps.
6.5.2 Increase Subsidy and Investment Levels in Poor
Counties
The level of funding available under the “New Mechanism” uses norms that are
appropriate for systems which are in steady state rather than systems that are
growing fast like China. Demographic transition means that in the developed parts
of China the number of school age children is stable. High enrolment rates mean
that there is no backlog of demand to catch up. It is therefore desirable to devise
methods to meet the financial needs of growth in western areas where historic
neglect and under enrolment create much greater demands on the financing needed
to close the gap between them and more advanced areas. The issue applies to both
capital and recurrent expenditure and must also recognize the limited capacity of
poor counties to raise revenue.
The transfer system is complex not least because there are many different levels
through which funds pass. This should be simplified wherever possible. The num-
ber of levels for financing is excessive—the central government, province, county
and township/village. Each has different procedures and protocols. Central gov-
ernment should lead on public resource allocation with a more direct relationship
to receiving counties and supplementary support from Provincial budgets (Zhang
2008 ). There is yet no standard financial transfer payments system to make the
transfer payment procedural, avoid artificial manipulation and extraction of rent-
als, reduce transaction costs, and guarantee the fund for compulsory education is
allocated in a timely way (Tian and Cai 2005 ).
6.5.3 Improve the Methods of Supervision, Accountability
and Evaluation
Supervision and inspection are essential if the rural education financial guarantee
system is to be successfully implemented. There is considerable gap between for-
mulate policy, implement policy and the results of the policy. Local government
needs methods to insure internal accountability and monitor fund allocation and
impact. Central government needs independent evaluation of the performance of