Subsidy for Basic Operational Expenses of KGs

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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.

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(b) Premises-related expenses (i) KG premises rentals (ii) Major repair

7.3.2 With a view to collecting more comprehensive information and making recommendations for consideration of the Committee, two consultancy studies had been commissioned to examine specifically the human resources requirements and remuneration as well as KG rental issues.

(a) Subsidy for Staff Salary-related and Other Operating Expenses

Current Situation

7.3.3 On staff salary-related issues, the Committee is aware that under the former KG and Child Care Centre Subsidy Scheme, KGs were required to pay teachers according to the Recommended Normative Salary Scale. Upon the introduction of PEVS, the Recommended Normative Salary Scale was abolished so as to allow all KGs to have full discretion in determining salaries for teachers and awarding increments to them in consideration of their experience and performance. Currently KGs have different school-based arrangements for determining their teachers’ salaries. Some KGs follow basically the Recommended Normative Salary Scale while some offer remuneration and salary adjustments based on school-based criteria such as performance, qualifications, etc. According to the annual teacher survey conducted in September 2014, the average salary of teachers working full-time²³ in KGs under PEVS was about $18,800.

7.3.4 KGs adopt different practices in determining remuneration for KG teachers.

Some existing practices are as follows-

(i) Some KGs follow the civil service’s Master Pay Scale (MPS), for example, from Point 7 to Point 18 for teachers.

23 Full-time teachers refer to those working (including teaching, lesson preparation and administrative duties) in the kindergarten for 6 hours or above on every normal school day.

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(ii) The salary for some HD KG teachers is about two-thirds of that for full-day teachers.

(iii) Annual salary adjustments would be made in accordance with various school-based criteria such as staff performance, attainment of academic qualifications, years of teaching experience, civil service pay adjustments and Composite Consumer Price Index adjustments, etc.

The Stakeholders’ Views and Committee’s Deliberations

7.3.5 A consultancy had been commissioned to study KG staff salary and related issues. Specifically, the consultant’s recommendations covered the proposed salary structure for KG teaching and supporting staff positions as well as the subvention arrangements.

7.3.6 In the course of the Committee’s deliberation, members noted that there were strong calls for a mandatory salary scale to be put in place for compliance of all KGs. Some also considered that teachers’ teaching experience should be recognised upon transfer from one KG to another.

7.3.7 There were opposite views that the Government should only provide salary ranges for reference of KGs, so that KGs would determine the remuneration of their teachers in accordance with their school-based mechanism which should be open, transparent and with checks and balances. They considered that respecting KGs’

discretion in teachers’ and principals’ remuneration was in line with the principle of maintaining the flexibility and diversity of the KG sector. Nevertheless, some were concerned that teachers’ salaries would be market-driven if flexibility was allowed so a monitoring mechanism would need to be in place to make sure that KGs would follow the pay policy.

7.3.8 Some expressed the views that adopting the salary policy applicable to the aided schools would, among others, provide stability to the teaching force. However, some opined that the salary-related practices might not be applicable to KGs in isolation from the standardised funding mode for aided schools which is subject to the Government’s stringent control in, for example, the approval of class structure and the setting of class threshold.

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7.3.9 As set out in Chapter 5, it is recommended that a KG should be staffed with a principal, a vice-principal (for large scale KGs), senior teachers and class teachers, while very small scale KGs may not have any senior teachers. It is considered that a salary range should be provided for each position. Similarly, salary ranges would also be proposed for the core supporting staff of a KG, including clerks, janitor staff, and a cook in the case of KGs with a kitchen.

7.3.10 In this regard, the consultant examined the current pay levels of the core teaching and supporting staff positions in KGs, and conducted a thorough analysis and comparison with the pay levels of similar roles/positions in the job market. On salary of KG teaching staff, the consultant considered that basically the proposed salary should be higher than the current pay levels to reflect the upgrading of teacher qualifications since the introduction of PEVS. Apart from this, reference should be made to the pay levels of comparable roles/positions in the job market. In the case of teaching staff, the different positions, namely class teacher, senior teacher, vice-principal and principal would be comparable to entry level professional, professional, supervisor, and management in the market. For supporting staff including clerk, janitor and cook, reference should also be made to similar roles/positions in the job market.

7.3.11 On the funding arrangement for staff salary, the consultant was of the view that the aided school subvention mode, which is standardised and less flexible, might not be fully applicable to KGs. On the other hand, while the provision of funding in the form of a block grant would allow flexibility, clear guidelines should be provided for KGs to ensure the funding for staff salary would be used properly for the designated purposes.

The Committee’s Recommendations

(i) Staff Salary-related Expenses

7.3.12 In formulating its recommendations, the Committee has given due consideration to the views expressed by various KG stakeholders as well as the findings and proposals of the consultancy.

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7.3.13 The Committee recommends that competitive remuneration should be offered to KG teachers to attract and retain talents. The Government should set a salary range for each of the teaching positions and core supporting staff positions (clerk, janitor and cook) for reference of KGs.

7.3.14 The Committee is of the view that as compared to a mandatory salary scale, in which teacher salary is determined solely in accordance with seniority, a reference salary range, which would ensure competitiveness and at the same time allow flexibility for the KG management to decide on their staff remuneration, taking into account their teaching experience, performance, additional job duties, qualification, and training and special skills, etc. would be more appropriate. That notwithstanding, the Committee is fully aware that the concerns of KG teachers about their qualifications and experience not being recognised by KGs in determining their remuneration, particularly in cases when a teacher transfers from one KG to another, should be properly addressed. In this regard, the Committee proposes that specific implementation guidelines and clear rules and regulations should be set out to ensure that KGs use government funding appropriately for staff salary. For example, a certain proportion of the government funding should be designated for teaching staff salary expenses. Also, KGs should be required to set up a transparent school-based mechanism with checks and balances for determining staff salaries.

7.3.15 On the salary ranges for KG staff, having regard to the recommendations of the consultant, the Committee proposes the following reference salary ranges, and recommends that a mechanism should be in place to enable adjustment of the pay levels.

Teaching Staff Proposed Salary Range

(2014 price level)

Class Teacher $18,000 – $32,000

Senior Teacher $24,000 – $38,000

Vice Principal (for large scale KG)

$30,000 – $42,000

Principal II $34,000 – $47,000

Principal I $40,000 – $53,000

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Supporting Staff Proposed Salary Range

(2014 price level)

Clerk $10,000 – $18,000

Janitor $10,000 – $13,000

Cook $12,000 – $14,000

Note: For very small scale KGs, the rank of Principal will be comparable to Vice Principal.

7.3.16 As regards the funding arrangements for staff salary expenses, the Committee is aware that the salary-related practices under the funding mode for aided schools cannot be applied to KGs in isolation as explained above. The Committee recommends that government subsidy for staff salaries might be referenced on the mid-point of the respective salary ranges of the staff. The Committee also recommends the Government to consider introducing measures to address the KG sector’s concerns that KGs with a large number of long-serving teachers might not be able to meet the high expenditure on staff salaries if the provision is based on the mid-point salary. The Government should consider providing a safety net under which KGs may apply for additional funds on a case-by-case basis.

(ii) Other Operating Expenses

7.3.17 On the provision of subsidy for KGs to meet their other operating expenses, the Committee considers that the expenditure items currently accepted for fee revision purposes should generally continue to be accepted for subsidy under the future funding arrangements, which includes -

 Furniture and equipment

 Teaching aids, learning activities

 Teachers’ stationery, paper and other consumables

 Student handbooks, profiles, certificates, identity cards

 Water and electricity charges, telephone line, cleaning fees

 Postage charges, publications, transportation fees

 Insurance premium, first aid and fire safety equipment

 Audit fees, school administration service charges, etc.

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The list of acceptable items should be reviewed as and when necessary. For instance, expenditure items for school development or staff training purposes should be considered for inclusion. The subsidy for other operating expenses might be determined with reference to past expenditure patterns of KGs.

(b) Subsidy for Premises-related Expenses

Current Situation

7.3.18 KG premises-related expenses include expenses on rental, government rent and rates, repairs and maintenance, etc. KGs operate in different types of school premises and the rental costs vary considerably. Currently, some KGs operate in government-allocated premises (such as public housing estates) while others are in private premises such as rented premises in commercial buildings, church premises or private sites owned by school sponsors.

7.3.19 Of the 760 local NPM KGs in the 2014/15 school year, about 22% of them are in commercial premises paying market rentals, 26% are charged nominal or nil rental, and about 52% of them (396 KGs) receive rent reimbursement under the Rent Reimbursement Scheme (RRS).

7.3.20 There is great variation in rental expenses among different KGs. The relevant information is set out in paragraph 7.1.

The Stakeholders’ Views and Committee’s Deliberations

7.3.21 A consultancy had been commissioned to study KG rental and related issues.

Specifically, the consultant’s proposals covered ways to provide rental subsidy for KGs and how to tackle the rental issue in the long run.

7.3.22 There were views that rental subsidy should be provided to eligible KGs as rentals for school premises constitute one of the KGs’ major expenditure items. As long-term measures, the Government should explore measures to ensure a stable supply of KG premises (details of which are set out in Chapter 6).

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7.3.23 The Committee opines that the Government should make efforts to lessen the KGs’ rental-related financial burden. In this regard, the Committee has reviewed the existing RRS to consider if it would still be applicable in future for providing assistance to KGs under the future free KG education policy. The Committee notes that the existing RRS has the following major features:

(i) Over 80% of KGs in receipt of rent reimbursement are estate KGs.

(ii) Eligible KGs have to fulfil a set of eligibility criteria which include being NPM KGs, having satisfied the requirement of proven demand for KG places in the district concerned, and having an average rental below a cut-off rate determined by EDB.

(iii) The amount of reimbursement is based on assessment by the Rating and Valuation Department (RVD), and determined by the KGs’ fill-up rate (total no. of students / total permitted accommodation as stated on the Accommodation Certificate). KGs will receive full reimbursement for a fill-up rate of 50% or above, or receive only 50% reimbursement for a fill-up rate below 50%²⁴.

(iv) A biennial monitoring mechanism is in place to assess if KGs will continue to be eligible for rent reimbursement.

7.3.24 There were views that under the future free KG education policy, all local NPM KGs should be eligible for rental subsidy, such that their financial viability can be enhanced and all parents will benefit. It would be different from the current situation where only about 50% of NPM KGs are in receipt of rent reimbursement. It was suggested that the eligibility criteria of ‘proven demand for KG places in the districts concerned’ and ‘rental cut-off rate’ under RRS might no longer be applicable in future. The Committee considers that a new rental subsidy scheme has to be devised which should be financially sustainable to both the Government and KG operators.

24 New KGs with the school premises allocated by the School Allocation Committee are eligible for full rent reimbursement in the first three-year tenancy agreement regardless of their rental cost and fill-up rate.

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7.3.25 There were views that as the rental charges among different KGs vary significantly, there should be a ceiling on the amount of subsidy to be provided for each eligible KG to ensure proper use of public funds. As a result, some KGs which operate in commercial premises may need to pay extra rental expenses on top of the rental subsidy provided by the Government, if any. In this regard, there were concerns that the competitiveness of some KGs in recruiting students might be reduced.

7.3.26 Some raised the concern that KGs in districts of over-provision of KG places would also receive rental subsidy when the ‘proven demand for KG places’ is no longer an eligibility criterion. It was hence proposed that the actual amount of rental subsidy for a KG should continue to be determined based on the KG's fill-up rate in terms of student enrolment and school capacity. The Committee fully agrees that the Government should exercise control in the provision of rental subsidy, and there should be appropriate mechanism to ensure that free KG education does not lead to subsidising profits of KGs and/or owners of KG premises.

7.3.27 On the ceiling of rental subsidy, one option proposed by the consultant was to use the average unit rental of KGs within a district as the subsidy ceiling for KGs in that particular district. However, this option was considered undesirable as it would be difficult to achieve an optimal grouping of KGs given the great variation in rentals of KG premises. There were also concerns over a potential inflationary effect on KG rentals as some landlords might raise the current rentals to the subsidy ceiling.

Another possible option was to make reference to rentals of comparable KG premises in public housing estates. This option was considered more preferable as the rentals of estate KG were relatively less volatile, and it would also be in line with the long-term goal of increasing the provision of government-owned premises in public housing estates. As regards the level of rental subsidy, given that all KGs under the future free KG education policy might be eligible for rental subsidy, the consultant was of the view that for prudent use of public funds, there might be a need to have more tiers of subsidy according to fill-up rates of the KGs.

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The Committee’s Recommendations

(i) KG Rental

7.3.28 In formulating its recommendations, the Committee has given due consideration to the views expressed by KG stakeholders as well as the findings and proposals of the consultancy. The Committee is of the view that rental subsidy should be provided for eligible KGs as recurrent funding on a per school basis to alleviate KGs’ financial burden.

7.3.29 The Committee proposes that the Government should take into account the following in the design of the new rental subsidy scheme:

(i) The current RRS should be reviewed to enable the amount of rental subsidy for a KG to become contingent upon the KG’s fill-up rate.

Consideration may be given to introducing more tiers of rental subsidy according to different fill-up rates to guard against using public funds to subsidise over-provision of KG places.

(ii) There should be a ceiling on the amount of subsidy to be provided for each eligible KG to ensure proper use of public funds. The ceiling may be set with reference to the rentals of comparable KGs operating in premises situated in public housing estates. The rentals of estate KGs are relatively less market-driven as compared to the rental of KG premises in commercial premises, which will enable better budgetary control for the Government.

(iii) KGs under the future free KG education policy which are receiving rental subsidy less than their actual rental payment shall be allowed to charge a fee to be approved by EDB to cover the difference.

7.3.30 The Committee also recommends that there should be some transitional arrangements to help KGs under the existing RRS migrate smoothly to the new scheme.

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(ii) Major Repair

7.3.31 As for major repair, the Committee is of the view that for leased premises, major repair should be the responsibility of the owner rather than the KG tenant.

Hence, the Committee considers it not necessary to provide additional funding for them for the purpose.

7.3.32 As for other eligible KGs operating in self-owned school premises or premises owned by their SSBs with zero/nominal rent, the Committee recommends that the Government should consider providing subsidy to alleviate the financial burdens arising from major repair. EDB would need to work out the details about the eligibility criteria for such subsidy.

Other School-specific Subsidy

7.3.33 For other school-specific subsidies such as additional funding for KGs admitting a cluster of NCS students, the details are set out in Chapter 8.