It has been revealed that the about 1/3 of the Parents Fund - a kind of tuition charged by national universities for education infrastructure development - has been used inappropriately for faculty and staff compensation. The Board of Audit and Inspection said that they discovered this fact during an Education Field Audit on 18 Feb 02. They immediately urged abolishing the Parents Trust Fund and the merging of its finances into the General Account. According to the audit, national universities have assigned 233.2 billion won (32%) out of a total 730.7 billion won "business promotion fee" to faculty and staff compensation, under the pretext of improving school affairs, guidance etc. As the result, faculty and staff of national universities get paid 0.5 - 1 million won more per person ministry of education staff at the same governmental pay grade. It was also revealed that national universities have created new allowance items using profits generated from university entrance application fees what are then shared among the staff in charge, the dean of school affairs, the president of university and so forth by increasing the allowances. As specifically regards the Brain Korea 21 program, J university purchased 4.27 million won worth of equipment irrelevant to the program that Brain Korea 21 subsidizes; professor Park, so-and-so of G university spent 15 million won of "research money" using false receipts - but got caught. It was also revealed that some universities inappropriately paid 246 million won of Brain Korea 21 money to 113 beginning students rather than to advanced students - in Masters degree and PhD programs.
The Seoul National University Student Council said on 3 Jun 03 that it will demand a national audit of its Parents Fund in light of recent fee increases. The Student Council said that, "It is not apparent that the 'Business Promotion Fee' or 'Research Expense' of the Parents Trust Fund are appropriate charges. We demand this audit as a right of students who must pay into the fund."
The national audit system allows any group of at least 300 local people with voting rights to request from the Board of Audit an inspection for the improvement of administration or national policy. The Students Council received signatures from more than 1,000 students. The Student Council asked specifically on the audit request form for justification of a 6.6 billion won expediture for improvement of staff labor conditions, which was funded primarily from increased Parents Trust Fund fees.
The Student Council also said that, "Although the original purpose of the Parents Trust Fund was for parents to fill education infrastructure needs that the nation couldn't meet through its university support budgets, the fund is used now abused, at least at Seoul National University. We will have to iron out this problem using legal and political means because solving it with polite conversation has already failed."
It was revealed that National universities, including Seoul National University, have been increasing their Parents Trust Fund fees - criticized as "Stealth Tuition Increases" - at will. This has led to urgent calls for countermeasures, particularly on the grounds that the actions behind the increases were illegal and evasive.
National universities have increased their Parent Trust Fund fees at rates 2-3 times the cost of living, according to an analysis submitted to Congresswoman Lee Mi-kyung. This conclusion is based on two key documents: "The Minutes of Parents Trust" and "Revenue and Expenditure Budget Document of 2003 Classified by University". Congresswoman Lee serves on the National Assembly Education Committee, which oversees 47 national universities, including Seoul National University.
It was also revealed that the fund increases were fiscally unjustified, in that the 124 billion won Parent Trust Fund balance carried over from 2003 was about twice the Parent Trust Fund fees fee increases - made in spite of students' strong objections.
Moreover, in the case of Seoul National University, it was revealed that the Parents Trust Fund carryover, 13.5 billion won, was larger by 2.8 billion than the 8.5% increase in Parent Trust Fund fees (11.1 billion won). Korea National Open University similarly increased its Parent Trust Fund fees by 18.6%, even though the balance carried over from last year was 13 billion won.
At the same time, it was revealed that the national subsidy, which is one of the main sources of support for national universities, decreased by about 10 billion won from its value in 2002. It thus appears that national university finance responsibility is shifting slowly to parents through the Parents Trust Fund.
Congresswoman Lee Mi-kyung pointed out that, "National universities are attempting to expand their financing through increases of the Parent Trust Fund rather than national subsidy, thereby evading governmental complications. Competitive increase of the funds in the face of large carryover balances from last year is explicit evidence for this."
There are indications that the national universities have spent the Parents Trust Fund haphazardly and that management of the Parents Trust has been slapdash.
Although the Board of Audit and Inspection said explicitly, "Don't pay bonuses or allowances to faculty and staff with the Parent Trust Fund", some national universities have just ignored the order. Some have been caught. For example, Chungbuk University's inappropriate payment of night duty overtime from the Fund was discovered and disciplined. Chungnam University was caught paying scholarships for faculty and staff children with the Fund.
It was also revealed that most of the national universities have not held Parents Trust general meetings for the last 5 years, and that some universities do not even recognize the requirement of a general meeting of the Parents Trust. Thus the Parents Trust is often managed in a way oblivious to the wishes of parents.
Congresswoman Lee Mi-kyung commented, "If involving parents in Parents Trust management is not easy, universities must find a way to guarantee transparency through various methods, such as opening its management or involving parents or students in the Parents Trust."
Although the Parents Trust Funds of national universities were begun in 1977, the "Stealth Tuition Increases" began in 1989 when Parent Trust Fund increases were left up to the universities. Since then they have become increasingly controversial. The Parents Trust Fund fee, which is billed to parents along with entrance fees and tuition, is one of the main sources of conflict between student and school.
In 2001, the Board of Audit and Inspection called the Parent Trust Fund system into question by commenting, "Schools charge a Parent Trust Fund fee on the grounds of a "Parents Trust Rule" that has no legal basis. Moreover most of the fund is being used for consumables such as faculty and staff compensation, business promotion expenses and so forth, NOT for the stated purpose, which is to secure urgently needed education facilities. This behavior increases the parents' burden."
Congresswoman Lee Mi-kyung said, "It is essential to recover trust between students and school by reorganizing Parents Trust Rule democratically" She demanded that the government "... make the Parents Trust Fund management more democratic and transparent."
It was revealed today that Parents Trust Fund fees in national universities have risen at an average rate of 7.6% over the last 5 years, 3 times greater than the cost of living increase of 2.7% per year.
Also it appears that the fund is used illegally for consumptive expense such as faculty and staff compensation and business promotion, NOT for the stated purpose of securing urgently needed education facilities.
This fact was revealed by "The Minutes of the Parents Trust Fund" and "Revenue and Expenditure Budget Document of 2003 Classified by University", documents submitted by Congresswoman and member of National Assembly Education Committee Lee Mi-kyung on 15 Sep 03.
According to the data, national universities increased their Parent Trust Fund fees from 18.6% to 4.6% - an average increase of 7.6%. This number is 3.8% above the average cost of living increase per year. Also, as the Parent Trust Fund balance carried over (124 billion won) exceeds the total increase (75.9 billion won) by 48.5 billion won, it appears that the fund increase is unnecessary.
According to the Ministry of Education's own audit, Chungbuk University used the Fund to pay night duty overtime, and Chungnam University used it to pay scholarships for its hospital staff children. It also appears that Cheongju National University of Education and Gongju National University of Education failed to seek reinstatement of Parents Trust Fund allocations from faculty that did not submit research reports.
Also, even though the Estimated Budget of the Parents Trust Fund must be decided before every fiscal year and the Statement of Closing Account must be submitted within 30 days after the fiscal year begins, it was revealed that many universities did not follow this rule.
The Parents Trust Fund fee, which has led to controversy because of what the Board of Audit and Inspection says is its poor legal basis, has been increasing at a yearly rate greater than that of the cost of living.
Congresswoman Lee Mi-kyung, a Member of the National Assembly Education, said, "The national universities have been raising their Parent Trust Fund fees by 5-12% annually. This is documented in the 'Parents Trust Fund Management of National Universities', a document submitted by 47 national universities."
The fees grew this year faster than the 2.7% rise in the cost of living. Over the past several years fee increases have averaged 7.6%, almost twice the 3.8% average cost of living increase.
In addition, the total balance carried over from last year, 124 billion won, was 48.5 billion won larger than this year's 79.5 billion won increase of the Parents Trust Fund fees. In particular, the balance carried over at Seoul National University, 13.5 billion won, is 2.4 billon won larger than the 11.1 billion won increase of SNU's Parents Trust Fund budget.
Congresswoman Lee said that, "The situation in which the total balance carried over exceeds the fee increases indicates that we are transferring financial responsibility to the parents." She also said that, "Since the Parents Trust Fund must be managed along with support for general account, it seems that that Parent Trust Funds of national universities are racing ahead to increase tuition as high as private universities."
The Seoul National University Student Council said, "As the current Parent Trust rules infringe on education rights, property rights, and the right to pursue one's happiness, we will file a constitutional petition charging parents as plaintiffs on 24 Oct 03." Civil actions have been brought against the Parent Trust Fund of Seoul National University many times so far, but this is the first time that a constitutional petition has been filed.
The Student Council will sue to recapture excessive profit next week, with the Parents as plaintiffs. Its key claim is that, "The Parent Trust Fund is appropriated by a Parent Trust that does not represent parents."
Seoul National University has increased its Parent Trust Fund fees as a means of making up a shortfall in faculty and staff compensation from tuition appropriations. However the Student Council revolted against this practice and now prepares for legal action on the grounds that management of the Parents Trust is undemocratic.
It appears that Korean universities are reaching the level of Ivy League universities. Unfortunately, the Ivy League level means only tuitions. Tuitions at Korean universities haven't yet reached ivy league levels of $20,000 but they might soon, given their skyrocketing increases. The ivy league tuition era would surely follow closely after 10 million won tuition era now approaching. A power struggle is on in most universities between schools and students. As usual, most of universities issued 7-15% tuition increase notices. Naturally negotiations are underway with rebelling students. In the case of private universities, tuition has increased about 10% every year since it was liberalized in 1989. After the IMF financial crisis of IMF, the universities showed prudence by increasing tuition by only 0.5% in 1998 and 0.1% in 1999. But they showed their true character by increasing tuition by 9.6% the following year.
Tuition then steadily increased: 5.9% in 2001, 6.5% in 2002 and 6.7% in 2003. The central issue is that these increases exceed those of the cost of living. Assuming that the consumer price index of the year 2000 was 100, the index grew to 110.7, an increase of 10.7%, in 3 years. The tuition index, by contrast, grew to 120.8, a 20.8% increase. Indeed, the tuition index of private universities in Seoul grew to 123.3. This is twice the average cost of living increase. The universities argued that they had no choice but to increase tuition to cover costs of hiring of new faculty and constructing new buildings. They said that tuition increases were a necessary consequence of funding the university entirely with tuitions. However, according to an analysis of Estimated Budget and Closing Account data performed by the Korea University Education Research Center, private universities made thousands of billion won margins by drawing up estimated budgets larger than the actual budget expenditure items.
By means of this creative budgeting, private universities made a 1459 billion won margin in 2002. They did this also in previous years. In 2000 they made a 959 billion won margin. In 2001 they made a 939.7 billion won margin. These margins went into the balance carried over in reserve. Then they put a burden of the exaggerated budget computation to the students through tuition increases without touching this carried over reserve balance. Korea University Researcher Hwang Hee-sook said that, "Private universities should abolish unjust tuition increases by drawing up budgets close to the closing account based on a reasonable analysis."
The situation of public universities is not that different. Low-priced tuition with the objective of "Equality in Opportunity of Education and the National Responsibility of Education" is history. The rate of tuition increase of public universities is much higher than that of private universities. Tuition in the Humanities Department of Seoul National University is 1.99 million won, an increase 15.69% over last year. The Science Department and Engineering Department tuitions are 2.47 million won and 2.5 million won, increases of 9.02% and 8.98% over last year. If this tendency continues, it seems like that the days of not envying the tuition of private universities are numbered.
The principal offender of tuition increases in national universities is the Parents Trust Fund. Its alleged purpose is to support and secure urgently needed education facilities and school management needs. The organization that governs the Parents Trust Fund is the Parent Trust - the members of which are, in principle, all parents who send their children to that school. However, few parents know that they are the members of the Parent Trust, and parents are generally excluded from voting on the Estimated Budget of the Fund. The university draws up an estimated budget of its own, summons the trustees (who are not elected), and passes the entire burden on to parents. The tuition that Mr. X (24 years-old) who returns to the Social Science Department of Seoul National University has to pay 1.66 million won. Although pure tuition is 329,000 won, an increase of only 45,000 won over the previous year, the Parents Trust Fund fee comes to 1.33 million won, an increase of 566,000 won over the previous year.
Mr. X continued, "I was too shocked to think. If didn't have a part-time job, I couldn't afford to attend the school." But, the expenditure details of the Parents Trust Fund are as unclear as its decision process. This evokes dark images because most of expenditures do not match their stated purposes - such as being spent as faculty and staff labor condition improvement, part-time instructor fees, supplemental fees for public utility charges, and so forth. Chungnam National University outraged students by insisting on increasing the Parents Trust Fund fee by 18.5% without revealing the reason. These kinds of strong-arm tactics have changed the tuition struggle from one of individual schools to one of associations. Indeed the tuition struggle had been criticized in the past as a "Golden-Bell Tree Struggle" because it occurred during March and April when the golden-bell tree blooms, and then faded away when the golden-bell blossoms wilted. Last February, students from about 70 universities around the country banded together to form the Korean University Students Education Countermeasures Committee, an organization dedicated to enlarging the tuition issue from a school affairs matter to a social issue. This committee then suggested a "Social Mutual Agreement Organization", in which representatives of university presidents, representatives of university students, faculty labor unions, university labor unions, representatives of parents and the Ministry of Education all worked together to forge a reasonable tuition decision. The Ministry of Education immediately dismissed the proposal and stated that, "Tuition is at the university president's discretion," But determining tuition this way may be unworkable. Instead we may need legislation to force involvement of students and civil organizations in the decision process. A person in Ministry of Education said, "The problem is that the university thinks of increasing tuition as the easiest way to balance its budget. Although the government cannot set the tuition rate for each university, we must, at least, lead the parties to better understand the problem."
An education specialist asserted, "As long as education finance is not secured at 6% of GNP and the university remains undemocratic, the tuition conflict will be repeated." If correct, it means that the tuition issue can not be "solved" without fully resolving the problem because it is entangled with undemocratic school practices, formal negotiation processes and the indifference of government." We have to be aware that the tuition issue might jump the school fence. One thing for sure is that an era of sorrow in which people cannot go to university even by selling the parent's cow has come.
The Board of Audit and Inspection has disclosed that some national universities, including Seoul National University, divert Parents Trust Fund for faculty and staff compensation and business promotion fees. Seoul National University, in particular, was reprimanded for this same diversionary action from the Board in 2001 and asked to take corrective action. It chose to ignore the recommendation and steeply increase the compensation rather than correcting. According to the Board of Audit and Inspection, Seoul National University diverted 2.2 billion won from the Parent Trust Fund for extra faculty and staff compensation in 2002, and diverted 8.6 billion in 2003. Chunnam University similarly diverted 1.2 billion in 2002 and 1.3 billion in 2003. The Board of Audit and Inspection commented in 2001 that "the Parent Trust Fund must be used for purchase of experimental or practice equipment and similar education facility investment. It further instructed, "Don't pay or increase faculty and staff compensation from the Parent Trust Fund." Consequently, 36 national universities out of 48 followed the advice of the Board of Audit and Inspection, but 12 universities did not. Seoul National University, Chunnam National University, Jinjoo National University and nine others have diverted the Parent Trust Fund to faculty and staff compensation. It was also revealed the practice of providing "business promotion fees" to the university president and deans with Parents Trust Fund money has not been corrected. According to the sample survey of the Board of Audit and Inspection, Seoul National University funded 1.4 billon won of business promotion fees with Parent Trust money in 2002. Pusan National University funded 795.5 million won from Parent Trust fees. Another 22 national universities allocated an average of 320 million won for business promotion fees from the Parents Trust Fund. The Board of Audit and Inspection subsequently asked the Ministry of Budget to reduce the government budget allocation for 12 universities that paid extra faculty and staff compensation using the Parent Trust Fund. It also asked the Ministry of Education & Human Resources Development to better supervise the compilation of the estimated budget and management of the Parents Trust Fund.
A total of 12 national universities, including Seoul and Chunnam national university were identified by the board of Audit and Inspection as increasing extra faculty and staff compensation from the Parent Trust Fund - an account that should be used only for purchase of experimental and practice equipment, and development of education facilities. This occurred despite repeated advice to the Ministry of Education & Human Resources Development from the Board of Audit and Inspection to tighten oversight. However, it was revealed that the Ministry of Education & Human Resources Development did not even consider any measures. According to the audit result entitled "Budget Management Situation of the 49 National Universities" released by the Board of Audit and Inspection on 28 Feb 04, Seoul National University increased faculty and staff compensation last year by 4.57 - 6 million won per year (a 40%-65.2% increased from 2001) and funded the expenditure with a 2.2 billion won charge on the Parents Trust Fund. In total 12 national universities routinely diverted Parents Trust Fund money to faculty and staff compensation. For example, Chunnam and Chinju national universities paid faculty and staff compensation of 1.3 billion and 833.99 million won from the Parent Trust Fund. Seoul National University also diverted 2.2 billion won out of the Parents Trust Fund for faculty and staff compensation in 2002. They increased the amount of diversion rather than correcting it. Changwon National University, Chinju National University, Mokpo National Maritime University and Chunnam National University similarly increased faculty and staff compensation from the Parent Trust fund 2 years in a row, in flagrant disregard of the recommendations of the Board of Audit and Inspection for tightened supervision of the Fund. A staff member of the board of Audit and Inspection said, "As a result of Parent Trust Fund manipulations, faculty and staff of national universities tend to get more compensation than civil servants of the same pay grade. We are considering giving reducing the budget allocation for universities that use the Parents Trust Fund as salary or otherwise abuse the Fund. Ministry of Education was officially advised in February of 2002 that "National Universities are not to increase compensation using the Parent Trust Fund." But as this advice does not contain any detailed guide - in effect neglecting the problem - the Ministry of Education cannot avoid being criticized of "sheltering its own family." On the other hand, the 22-university sample survey (standard: year 2002) researched by the Board of Audit and Inspection shows that University A charges a Parent Trust Fund fee of 1.77 million won per student while University B charges 1.92 million won. University A then allocates 8,000 won per student as a "business promotion fee" while University B allocates 50,000 won. Therefore, the Parents Trust Fund allotments per national university student, the business promotion fees and the increases in Parents Trust Fund charges aren't balanced or coordinated.
According to the National Assembly inspection data submitted by Seoul National University on 18 Feb 04 to Congressman Choi Soo-young (Democratic Labor Party), the total annual tuition of 4.32 million won consists of pure tuition (695,990 won) and Parent Trust Fund (3.62 million won). Thus the Parent Trust Fund accounts for 83.9% of the entire tuition. This shows that the total amount of tuition charged by Seoul National University is the highest of any public university. This practice could stimulate other public universities to increase their tuitions in the same way. Congressman Choi indicated that the Seoul National University Parents Trust increases fees easily because most of Parents Trust Funds of the 15 colleges 4 graduate schools are run by wealthy men such as CEOs, lawyers and doctors. Congressman Choi also said, "This problem stems from the Parent Trust formation itself." He further noted that, "The Parent Trust can represent parents only if the current process for appointing trustees is changed to assigning trustees from a pool of parents recommended by the Student Council and College Student Councils."