hankyoreh

By Lee Soon-hyuk　

An audit by the Board of Audit and Inspection (BAI) has revealed that universities have been fixing higher tuition fees using methods including increasing predicted expenditure and decreasing predicted income when devising their budgets. Calculations indicate that eliminating this “bubble” could reduce current tuition by an average of around 20%.

BAI stated on Thursday that the results of the investigation of a sample of 35 universities (6 state or public and 29 private) that it had chosen indicated that these universities had predicted expenditures on average 490.4 billion won ($440.2 million) too high, and income from sources other than tuition fees on average 164.8 billion won too low. The combined total in lowered income and raised expenditure comes to 1.35 trillion won: more 20% of the total 5.15 trillion won in tuition fees charged by the universities.

The universities‘ financial management practices as revealed by the BAI’s audit can be summarized as “income to foundations, expenditure from tuition fees.” Private university foundations, despite raising tuition fees excessively through arbitrary budget fixing, did not even release details of foundation contributions, as stipulated by the law.

The most frequently cited reason for high tuition fees is excessively “high-expenditure, low-income” budget fixing. Universities normally create tuition fee increase plans on grounds of insufficient income. If this involves setting higher expenditure and lower income from foundation contributions or from the university itself, this inevitably increases the role to be played by tuition fees. This is why tuition fees, of which universities have had entirely autonomous control since 1993, have more or less doubled over the last 10 years.

A typical example is university “S” in Gyeonggi Province, which appropriated 22.7 billion won for building construction and extension costs into budgets over the past several years, without providing specific construction plans. When it found itself with an average of 18 billion won left over at the end of each financial year, however, it failed to reflect this as part of the income in its budget plans.

Universities are including income from sources such as donations and facility rentals in their corporate accounts, rather than as school accounts income, as they are supposed to. They paid their employees’ private university pension and health insurance contributions, which should have come out of their corporate accounts, from their school accounts.

The audit revealed corruption on the part of numerous university staff members, from chief directors to university presidents, professors and other employees. The family of the chief director of university “K” ran three educational foundations and embezzled 16 billion won in school fees.

“This executive director resigned due to embezzlement, but the Ministry of Education, Science and Technology allowed him back into his job without having paid back the sum embezzled, thereby initiating further embezzlement cases,” BAI said.

The family of the chief director of university “S” arbitrarily transformed educational facilities into profit-making facilities, embezzling 3.2 billion won in income, even using 180 million won to buy a motor home. The BAI added that numerous cases had been discovered of university presidents receiving rebates from particular companies.

At famous private university “K,” one professor was exposed for diverting 340 million won that should have been paid to his researchers into private insurance contributions and a private brokerage account. At “Y,” another famous private university, one professor was found to have embezzled around 60 million won in equipment use fees. More than 30 members of staff at 14 other universities embezzled more than two billion won and squandered it on share investments.

This audit is expected to result in the punishment of at least 200 chief directors, university presidents and professors, including criminal charges.

“Yonsei University recently went as far as launching a constitutional appeal against audits by the Board of Audit and Inspection, but this audit has officially confirmed the result of indiscriminate university autonomy,” said Kim Sam-ho of Korea Higher Education Research Institute. “But consequent improvement policies should come not in the form of ‘university assessment penalties,’ as stated by the BAI, but of amendment to the law on private universities.”

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