Korean Educational Development Institute(KEDI)

A Study on Estimating Standard Unit Costs of Government Funding Project for Higher Education

As the government’s budget support increases for universities through higher education project funding, efforts are being made to ensure that funding decisions are based on objective evidence such as national subsidy outcomes and adequate grant levels. Recognizing that existing funding formula relies on similar operational experiences or analogy-based calculation, this study looked into ways to improve the funding formula so as to secure more reasonable and objective grant allocations.

Calculating the standard unit cost of project grants means computing costs based on scientific evidence, even when public budgeting is designed to support non-for-profit entities such as universities. Using the standard cost per unit provides a basis for systemized performance management of grant projects, and ultimately helps to enhance the effectiveness and efficiency of national subsidies. Deriving standard unit costs can be used in policy procedures, as it will offer objective evidence to request higher education budgets when consulting with the National Assembly and Ministry of Strategy and Finance. It will also induce a rational allocation of budgets required to achieve set goals for subsidized projects.