Mode of Funding

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other criteria, be NPM, offering a local curriculum that conforms with the KG curriculum guidelines published by EDB and having proven track records on providing quality KG education. This is in line with the existing practice and policy of the Government. The Committee further recommends that for other eligibility criteria, reference might be made to some of those of the existing PEVS such as meeting the requirements in teacher qualifications, quality assurance and transparency in operation.

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there were strong calls that the Government should fully subsidise KGs by adopting the aided school subvention mode. Others opined that the Direct Subsidy Scheme (DSS) mode, whereby funding was given to schools primarily on a per student basis, might be considered. There were also other suggested funding modes.

7.2.3 In view of the diverse views, the Committee had examined the main features of some existing subvention modes, analysed their pros and cons as well as their applicability to the KG Sector. The major observations and views are summarised below.

PEVS

(i) It is conceived by many that PEVS would facilitate freedom of choice on the part of parents. PEVS would preserve the market responsiveness of the sector and enhance quality at the same time. Some appealed for enhancing the existing PEVS to provide parents with more subsidy and choices.

(ii) However, some have expressed reservations over providing direct subsidy to parents as the market force alone might not be sufficient to drive quality in KG education, neither can it address the school-specific needs such as the specific target groups that they serve, or the unique services that they provide. Specifically, enhancement to PEVS voucher subsidy as the funding mode for free KG education is considered incapable of addressing the concerns of WD or LWD KGs, which have all along complained about financial difficulties arising from inadequate subsidies.

Aided school subvention mode

(iii) The Committee notes that under the aided school subvention mode, there are stringent planning parameters to ensure that sufficient subvented school places are available under compulsory education.

Aided schools are financed by the Government according to the Code of Aid, in which rules are also laid down for various issues including the

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salary scale of teachers, appointment, promotion and dismissal of staff, admission and dismissal of students, etc. The level of subvention for each school is mainly based on the approved class structure which also determines the staff establishment. To ensure public funds are utilised in a cost-effective manner, there is a class threshold for approving the number of classes to be operated in each school. In other words, when the student enrolment falls short of the threshold, classes will be packed accordingly and shrinkage of the staff establishment will result.

(iv) Some members were in favor of adopting the salary policy applicable to the aided schools as such it is believed that; among others, should provide stability to the teaching force. Notwithstanding that, the Committee notes that such salary-related practices could not be applied to KGs in isolation. Specifically, the salary-related practices are part and parcel of the standardised funding mode for aided schools.

(v) The aided school funding mode contains several inter-connected components such as approval of operating classes and teacher entitlement, and is subject to a basket of control measures under the Government’s prudent and balanced planning of school places operated through school place allocation systems. For instance, as mentioned in (iii), according to the class approval mechanism, a drop in student enrolment would result in class packing and teacher redundancy.

Therefore, rigid adherence to the aided schools’ salary policy by KGs will actually hamper the stability of the teaching force. There might even be pressure for closure of some very small KGs in times of student population drop.

(vi) Also, the aided school funding mode is premised on a centralised school place allocation system to ensure student placement is conducted in a fair and transparent manner through the creation of school nets. If such is adopted in the KG sector, this will inevitably affect the sector’s overall operating flexibility in coping with the rise and fall of students in different districts. On the other hand, diversity in the present KG system is cherished by parents as their children have wide choices of different types of KGs not bound by districts. Location-specific feature in the school-net system is therefore considered not suitable in a free

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KG education context.

(vii) Besides, unlike the aided schools that are operated mainly in government-owned or rental-free private lands, the operation of KGs in commercial premises will render the planning of school places in a holistic manner neither practicable nor feasible.

Direct Subsidy Scheme (DSS)

(viii) The Committee notes that the objective of the Government to introduce the DSS was to inject diversity to the education landscape by means of government subsidies and competition among different school sectors so as to provide parents with greater choices. Under the DSS, the funding for each school is primarily based on the average unit cost of an aided school place and the school’s actual enrolment.

Unlike their aided school counterparts, DSS schools are allowed to charge school fee for providing additional facilities and for implementing measures to enhance the learning environment.

Besides, DSS schools are given much greater freedom in areas such as curriculum, staffing, entrance requirements, and other school policies.

(ix) Some favoured adopting the DSS, which aims at fostering diversity and parental choice in the school sector, as the funding mode for KG education. However, some have expressed concerns over the complete applicability of the DSS mode for future free KG education.

Under the DSS, private financing through fees for top-up facilities or provision is regarded as a useful supplement to public financing to cater for individual needs for some schools. However, the purpose of free KG education will be defeated if a lot of KGs will have to charge school fees to supplement their operating costs. Besides, there is no readily available reference rate for deriving the unit cost of a KG place as in the case of DSS which can make reference to the average unit cost of an aided primary/ secondary school place.

(x) There were views that the major feature of the DSS mode, i.e. the provision of a recurrent government subsidy in a lump sum based on

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student enrolment, which can give schools more autonomy and flexibility to deploy available resources so as to make better educational decisions for their schools and students, should be considered when designing the funding mode for free KG education. Nevertheless, should the Government wish to take reference from the DSS mode, it should be mindful to provide sufficient subsidy by way of unit rate and/or other school-specific subvention so that most parents do not need to top up KG school fees.

Lump Sum Grant (LSG)

(xi) On providing government subsidy by lump sum, the Committee has studied the LSG mode adopted in the welfare sector. Under the LSG funding arrangement, salaries and personal emolument related allowances as well as other charges are provided in a lump sum on an agency basis. Non-governmental organisations (NGOs) have flexibility in deploying their LSG.

(xii) The Committee notes that under the LSG mode, the lump-sum grant related to personal emolument is basically determined on the basis of the mid-point salaries of the respective ranks of the staff. In this respect, there were concerns over adopting the LSG mode for KG education.

(xiii) The Committee is fully aware of the sector’s concern about adopting the above-mentioned LSG mode for KG education, in particular the worry that KGs might not have sufficient funding to meet expenses on staff salaries and would be reluctant to employ experienced teachers, which will have negative impact on the quality of education.

The Committee’s Recommendations

7.2.4 The Committee recognises that in formulating the funding mode for the future free KG education policy, it is imperative that the diversity, vibrancy and uniqueness of the KG sector should be maintained. In making its recommendations,

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the Committee will make reference to the relevant features of the various existing subvention modes as well as the views expressed by the stakeholders.

7.2.5 The Committee has considered whether the future subsidy should be in the form of voucher as is the case for PEVS, or of providing funding for KG operators, or a combination of both. In this regard, while noting that PEVS may facilitate freedom of choice on the part of parents, the Committee is aware that the KG sector has complained that it has resulted in unhealthy competition among KG operators and failed to cater for the needs of KGs of different operation modes.

7.2.6 The Committee has also considered the pros and cons of adopting the standardised subvention mode for aided schools. It is of the view that the stringent control measures of the aided school mode, such as centralised student placement system, approval of class structure and setting of class threshold, may result in packing of classes and redundant teachers in KGs in times of enrolment drop. Also, KGs will become less flexible in operating HD and WD classes to meet the needs of parents. All these would not be conducive to maintaining the diversity, vibrancy and uniqueness of the KG sector. In the light of the above, the Committee considers it not desirable to adopt this funding mode for KGs.

7.2.7 While appreciating that the DSS mode may not be fully applicable to KGs, especially because DSS schools do not have rental issues, in designing the funding mode for KG, the Committee considers that the Government may make reference to some features of the DSS mode such as its unit cost approach, and the provision of different unit costs according to the school’s operating history.

7.2.8 As regards the LSG funding approach, the Committee is of the view that if reference is to be made to this mode, the Government should explore ways to address the KG sector’s concern over insufficient funding to meet the salary expenses of KGs and consider providing a safety net under which KGs may apply for additional funding on a case-by-case basis.

7.2.9 The Committee is aware of the complexity and diversity in KG operation as manifested in KGs offering HD, WD, LWD services and/or a mix of different types of services. The level of government subsidy for the different modes of KG operation

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and services might also be different in future. Based on the above analysis, the Committee recommends a more flexible funding mode be adopted under the new policy, whereby funding for individual KGs will be partly provided on a per student basis (i.e. unit cost approach) and partly on a school-specific basis to cater for the special circumstances of the KGs or the students.

7.2.10 Specifically, funding for teaching staff salary, supporting staff salary and other operating expenses would be provided for KGs in the form of a unit subsidy, i.e.

on a per student basis. Additional funding will be provided to cater for the specific needs of individual KGs, including rental subsidy, additional subsidy for major repair, additional resources for WD and LWD KGs, grant for KGs admitting a cluster of NCS students, etc. In this regard, a mechanism should be in place to enable annual adjustment of the unit cost and school-specific grant, and a regular review of the arrangement after the implementation of the new policy. The Committee is of the view that by adopting such a funding mode, the flexibility, vibrancy and uniqueness of the KG sector would be maintained.