Structure
1. The Operating Expenses Block Grant (OEBG) covers various non-salary recurrent grants with the exception of grants disbursed on an actual claim or reimbursement basis. The Grant comprises a General Domain and a Special Domain as follows -
(a) General Domain
Schools are free to decide the amount to be spent on individual constituent grants under this domain. If surpluses are available, schools may use such funds to top up expenditure on items in the Special Domain. Surplus of the General Domain can also be used on items chargeable to other government subsidies outside the OEBG.
(b) Special Domain
This covers grants which are allocated for achieving specific policy objectives. Each grant under the Special Domain is separate and no transfer will be allowed among the grants. Funds in this domain cannot be transferred out to ensure that schools will deploy the funds for the specified purposes, but they may be topped up with surpluses from the General Domain.
2. The Permanent Secretary may review the rates, the grouping of the constituent grants and virement arrangement when required. Schools are advised to refer to the relevant circular currently in force.
Principles and rules on usage
3. The OEBG provides schools with greater flexibility in the use of resources. In this regard, schools are allowed to set their own spending priorities and allocations, having regard to the objectives and policies laid down by their School Management Committees (SMC).
4. In exercising the flexibility, schools should always bear in mind that the interest of students comes first. They should also ensure that the expenditure incurred is reasonable and necessary for educational purposes. Thus, for instance, schools should keep expenditure on purchase of flower-baskets for ceremonial activities to a minimum. In addition, schools should ensure that any recurrent consequences arising from exercising funding flexibility will be absorbed within the OEBG or met by schools' own funds.
5. In incurring expenditure, schools should observe the ambit of the constituent grants of the OEBG, as set out in the Code of Aid and in circulars issued by the Education Bureau from time to time. In addition, schools should ensure that the total spending should be kept within the amount of the OEBG, i.e. no topping up of the OEBG will be given.
CODE OF AID FOR PRIMARY SCHOOLS
6. Subsidy will continue to be provided for Provident Fund (PF) contributions in respect of clerical and janitor staff employed within the provision allocated for Administration Grant or the Revised Administration Grant. For staff employed with funds under other constituent grants of the OEBG, schools should meet the PF contributions with surplus funds under OEBG or their own funds.
7. On the basis of the principles and rules stated above, the following items of expenditure shall not be charged to the OEBG –
(a) entertainment expenses such as lunch/dinner for staff not related to their discharge of duties;
(b) fringe benefits/welfare for staff, including housing benefits, provision of food or food allowance, medical expenses, travelling expenses, etc.;
(c) penalty charges, fines and interest payments;
(d) loans to staff or third parties;
(e) subscription to staff associations and professional bodies;
(f) write-offs, e.g. overpayments;
(g) administrative and management expenses, including salaries of staff, of the headquarters or other service units of the sponsoring organisation; and
(h) donations.
The above list is not exhaustive. The Education Bureau will revise the list and inform schools of the changes as and when appropriate.
(updated on 1 September 2017) Rates of the OEBG
8. When first introduced in the 2000/01 school year, the OEBG had the rates set on the basis of the rates approved for the 1999/2000 school year. The OEBG rates will be revised annually in accordance with the movement of the Composite Consumer Price Index. The Education Bureau will also review the need to revise in real terms the rates of individual grants as and when required.
Surplus retention
9. To give schools greater flexibility, schools are allowed to retain surplus balance up to 12 months’ provision of the OEBG. Applications for accumulation of surpluses in excess of 12 months' provision will only be considered in exceptional circumstances.
10. Schools should ascertain the surplus balances of grants under the General Domain and the Special Domain respectively. The surpluses should be totalled and if this total exceeds the 12 months’ provision of the prevailing level of the OEBG, schools should return the excess to the Education Bureau.
CODE OF AID FOR PRIMARY SCHOOLS
11. When the surplus exceeds the 12 months' provision, schools are free to decide from which constituent grant the excess may be clawed back by the Education Bureau.
Expenditure Control and Accountability
12. To ensure that the OEBG funds are spent properly and cost-effectively, schools should obtain directives from their SMCs regarding the scope, criteria and rules for allocating funds.
Schools should ensure that the approved budget is followed in incurring expenditure. To cope with urgent or unforeseeable needs, schools may consider seeking delegation of the authority from SMCs for making changes to the budget up to a certain financial limit.
13. Schools should ensure that the total expenditure is kept within the amount of the OEBG.
Any deficit will have to be met by the schools' own funds. Also, if expenditure is found improperly incurred or charged to the OEBG funds, the school should make good such expenditure by charging it to its own funds.
Accounting and Reporting Requirements
14. Schools should continue to maintain separate ledger accounts for each constituent grant of the OEBG. In addition, schools should keep a General Domain Control Account and a Special Domain Control Account for the purpose of recording and monitoring the surpluses.
Schools should also report periodically to their SMCs the expenditure position of the OEBG.
15. Schools should submit audited annual accounts and such other financial statements in accordance with the format as required by the Education Bureau. The auditors should certify that the OEBG funds have been used in accordance with the ambit and rules as promulgated in the Code of Aid and in circulars issued by the Education Bureau from time to time.
CODE OF AID FOR PRIMARY SCHOOLS
Appendix 15