Kindergarten Education Scheme
Refining the Arrangement for the Surplus of Unit Subsidy
(EDBCM No. 2/2022)
(1) Current arrangement
If kindergartens (KGs) are able to offer free quality half- day (HD) services and maintain fees for whole-day (WD) / long WD (LWD) services at a reasonable level
KGs are allowed to accumulate a respective surplus up to one-year provision of the teaching staff salary portion (i.e. 60%) and the other operating cost portion (i.e. 40%)
(2) Refining the arrangement for the surplus of unit subsidy
Starting from processing the 2021/22 annual audited accounts, when calculating the ceiling for the accumulated surplus:
the teaching staff salary portion (i.e. 60%) and the other operating cost portion (i.e. 40%) will be combined
To calculate the ceiling for the accumulated surplus based on the whole unit subsidy
If the accumulated surplus does not exceed its one-year provision, even if the surplus of one of the portions (e.g. the 40% portion) has exceeded the ceiling for this portion, the relevant surplus would not be clawed back.
Example 1
On condition that the 40% portion exceeds its reserve ceiling but both the 60% portion and the total accumulated surplus of unit subsidy have not yet reached their reserve ceilings:
The surplus exceeded will not be clawed back
** Under the prevailing principle, such surplus of the 40% portion can be deployed for teaching staff salaries
(2) Refining the arrangement for the surplus of unit subsidy
Example 1
HD basic unit subsidy = $10,000
A = teaching staff salary portion (60%) B = other operating cost portion (40%)
40% portion with surplus exceeding reserve ceiling
A (60%) ($) B (40%) ($) Total ($)
(a) Current year provision (= reserve ceiling) 6,000 4,000 10,000
(b) Accumulated surplus (at end of current year) 5,700 4,300 10,000 Clawback amount
(c) Current arrangement: A & B with ceilings set
as their respective ceilings 0 300 300
(d) Refined arrangement: A and B are
combined (i.e. reserve ceilings calculated based on the whole unit subsidy)
0 0 0
(2) Refining the arrangement for the surplus of unit subsidy
Example 2
On condition that the 60% portion exceeds its reserve ceiling but both the 40% portion and the total accumulated surplus of unit subsidy have not yet reached their reserve ceilings:
the surplus exceeded will not be clawed back
** Such surplus of the 60% portion must be used on teaching staff salaries
(2) Refining the arrangement for the surplus of unit subsidy
Example 2
HD basic unit subsidy = $10,000
A = teaching staff salary portion (60%) B = other operating cost portion (40%)
60% portion with surplus exceeding reserve ceiling
A (60%) ($) B (40%) ($) Total ($)
(a) Current year provision (= reserve ceiling) 6,000 4,000 10,000
(b) Accumulated surplus (at end of current year) 6,200 3,800 10,000 Clawback amount
(c) Current arrangement: A & B with ceilings set
as their respective ceilings 200 0 200
(d) Refined arrangement: A and B are
combined (i.e. reserve ceilings calculated based on the whole unit subsidy)
0 0 0
(2) Refining the arrangement for the surplus of unit subsidy
Example 3
The surplus of both portions have exceeded their reserve ceilings:
The surplus of unit subsidy will thus exceed the ceiling and such surplus will be clawed back.
(2) Refining the arrangement for the surplus of unit subsidy
Example 3
HD basic unit subsidy = $10,000
A = teaching staff salary portion (60%) B = other operating cost portion (40%)
60% and 40% portions with surplus exceeding reserve ceilings
A (60%) ($) B (40%) ($) Total ($)
(a) Current year provision (= reserve ceiling) 6,000 4,000 10,000
(b) Accumulated surplus (at end of current year) 6,200 4,300 10,500 Clawback amount
(c) Current arrangement: A & B with ceilings set
as their respective ceilings 200 300 500
(d) Refined arrangement: A and B are
combined (i.e. reserve ceilings calculated based on the whole unit subsidy)
200 300 500
(2) Refining the arrangement for the surplus of unit subsidy
Will be implemented starting from the processing of the 2021/22 annual audited accounts.
Under the refined arrangement, the surplus of unit subsidy will still be calculated separately according to different sessions (HD, WD and LWD).
The 60% of unit subsidy is prescribed for the expenses on teaching staff salaries. The surplus of 40% portion can be used on teachers’
salaries, but not vice versa. This basic principle remains unchanged.
For details, please refer to paragraphs 14 - 16 of the EDBCM No.
2/2022.
(2) Refining the arrangement for the surplus of unit subsidy
