Wrong sums at schools Teddy Ng The Education and Manpower Bureau has been criticised by the Director of Audit for making wrong projections of secondary student numbers, resulting in vacant school places and a waste of resources. The director urged the bureau to re-examine its projections on the supply and demand of secondary school places and to merge classes where necessary. The report released yesterday said there were 461,000 secondary students in 402 public and 94 private schools as of September 2002 The average cost of providing a public secondary school place is about HK$36,000 a year.The audit found that of the 402 public secondary schools, 50 had a total of 145 vacant classrooms. It also found that there were about 20,300 vacant school places as of September 2002. As funds are allocated on the number of operating classes, under-enrolment implied that the resources allocated were not being fully utilised, the report said. It also revealed that two of the 36 government schools had low utilisation rates, standing at only 30 per cent and 46 per cent. The cost of providing a government school place is HK$10,013 higher than that in a public school because staff are employed on civil service terms and enjoy fringe benefits. Despite the vacant places, the government still bought a total of 7,300 places from non-profit-making private schools at a cost of HK$246 million for the 2002-2003 school year. Three of these nine schools were awarded negative value-added scores by the bureau over the past three years. The audit report said the bureau still planned to build 34 new secondary schools by 2008, claiming the supply of public secondary school places would be insufficient to meet the demand, based on 2002 projections. However, the Director of Audit found that 10 of the 34 planned new schools were completed after the bureau had made its projections in 2002 which did not include the additional places these 10 new schools would provide. The report said that supply would exceed demand from 2010. The director urged the bureau to re-examine its projections and keep enrolments at all schools under constant review. It also said that the bureau should ask those schools which had not made significant progress in catering to the needs of their students to do so within a reasonable time. The report said that 147 operating classes could be reduced by merging those classes that had many vacancies. Secretary for Education and Manpower Arthur Li welcomed the report. He said the government would consider merging, relocating or closing schools with substandard facilities and high operating costs. But he said the government should also consider factors such as the overall provision of school places at the district level, class structure and parental choice. For example, while the number of school children in Wan Chai was small, schools there were popular and attracted students from outside the district. ``We need to give parents more choice. This is difficult to achieve if we aim to fill all places in a school,'' he said. Permanent Secretary for Education and Manpower Fanny Law said the government would consult educators on the acceptable minimum number of students per class. She said vacant places were caused by various factors, including the mobility of people, and that vacant places in a district did not mean necessarily the government should stop building new schools there. Education Convergence vice-chairman Ho Hon-kuen urged the government to reduce class sizes in schools where academic standards were low. This would allow teachers to concentrate on individual students. The Director of Audit also found that some tertiary institutions had adopted low overhead recovery rates for their self-financing activities, which included non-government funded academic programmes, research and consultancy work. This sparked concern that tertiary institutions were using government funds for activities that should be self-financing. In reply, the University Grants Committee said it accepted a recommendation to review whether the standard overhead recovery rate of 15 per cent was still appropriate. Polytechnic University's Hong Kong Community College acting director Simon Leung said the institution did not use government funds to support self-financed courses. University executive development director Anthony Tam said it was difficult to split accounts of self-financed and government-funded activities. Hong Kong University said it supported the audit's recommendations and that the university was keen to ensure overheads were recovered for all self-financing activities. 28 November 2003 / 02:54 AM Causes This news shows that the market quantity is higher than the equilibrium quantity. The quantity demanded is lower than quantity supplied (i.e. 20,300 vacant school places). There is an excess supply of school places. As we know that the birth rate in these recent years became lower and lower, which means that there is a decrease in demand for school places. However, the government continues to build new schools. That is the supply of schools increases. Besides, the quality of some schools have negative value-added. This results in less people willing to study in those schools, as all parents hope their children can go to the schools with positive value-added. So, their highest-valued option foregone is the middle school instead of the negative value-added school. All these factors caused the problem of excess supply of school places. This graph shows that the excess supply became larger because the government continues to build new schools although there is excess supply of school places already. Solutions To cope with this situation, the government should stop building new schools because this will make the excess supply higher. Stop buying school places from private schools and negative value-added schools. Also, the school that practiced half-time system is suggested to change to full-time system, so that more school places can be used. Other than this, we can use the vacant schools for other alternative uses. This can reduce the excess supply of the vacant schools. For instance, it can rent out for commercial use. This graph shows that the excess supply of school places became smaller if the government has carried out the policies that were said in the solutions. Remarks Although the government provides `Free Education for 9 Years’, this does not mean that it is a free good. It is because it is insufficient to satisfy all students’ wants. More years of free education is preferred to less and free of charge but it is not a free good. Also, the government has to pay for this system, so the production cost is more than zero. It is said to be an economic good.