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Seoul City still faces child care deficit despite subsidy increase

Seoul City still faces child care deficit despite subsidy increase

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Published : 2014-01-02 20:16
Updated : 2014-01-02 20:16

Seoul City is likely to continue its budget deficit for the free child care program this year, despite the increase in subsidies from the central government.

The city said Thursday that 60 billion won ($57 million) more was still needed to pay for the child care services, according to the new national budget plan.

The National Assembly on Wednesday passed the national budget plan, which increased the public subsidy for child care provision from 20 percent of the cost to 35 percent for Seoul and from 50 percent to 65 percent for other municipalities.

This is 5 percent less than the city governments requested.

The capital has been responsible for more of the cost than other cities because of its relatively independent financial status.

The central government has been at loggerheads with local authorities ― especially Seoul ― over how to shoulder the cost of free child care since the expansion of the service last year.

The central government extended the provision of free child care to children aged 5 and under from March 2012 the Seoul city government’s child care expenditure amounted to 1.07 trillion won last year, more than doubling from 2012. The state additionally provided about 150 billion won, leaving the city to pay around 370 billion won more than before.

Seoul Metropolitan Government has urged the central government to increase its child care subsidy from 20 percent to 40 percent, citing the budget deficit issue.

The state, however, only offered a 10 percentage point increase.

The city issued 200 billion won worth of municipal bonds in September to make up the budget shortfall.

Seoul Metropolitan Government also planned the city budget last November on the basis that the central government would support 40 percent of the free child care expenses, equal to about 580 billion won. The city was expected to spend about 400 billion won on free child care this year. The rest of the projected 1.2 trillion won child care budget will be paid for by the city’s district offices.

“We haven’t discussed further plans but we may consider asking the central government for additional support, such as a special subsidy tax. But for now, nothing is decided,” Cho Hyun-ock, the assistant mayor in charge of family policy told The Korea Herald.

By Lee Hyun-jeong  (rene@heraldcorp.com)

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