Research On The Governmental Regulation Of Private Kindergartens

Since the reform and opening up, China’s private kindergartens have been developing rapidly, thus effectively alleviating the problem that educational resources provided by public kindergartens are insufficient and greatly promoting the development of the pre-school educational business. However, in the meantime, with the development process, private kindergartens encountered countless problems such as the high charge, the excessively profit-oriented investors and no guarantee for the quality of educational services, This provokes the anxiety of the public. In this context, what kind of role the government should play in the pre-school educational service becomes a hot topic.Correctly identifying characteristics of private kindergartens lay a foundation for the government to establish its governance pattern and operation mechanism. In essence, the public power enforced by the government is used for pursing the public interest of the society and citizens, solving the public issues and providing the society with public products and services. The pre-school education has the properties of the qusi-public goods. Incorporating the pre-school education into the public service system is the consensus of all countries all over the world. However, it does not mean that the supply of the pre-school educational services should be directly dependent on the government. In fact, it is the obvious choice to diversify providers of the pre-school educational services to achieve a balance between supply and demand. From the development course of the private kindergartens, it can be clearly seen that on the one hand, the current market mechanism gives birth to the free choice and competition in the pre-school educational service, which plays an important role in enriching the pre-school education resource; on the other hand, the positive externalities of the pre-school education, the information asymmetry and other features of the pre-school education might easily lead to the market failure, thus calling for moderate government interventions.What the Regulation Economics concerns is the government’s intervention of the activities of economic entities, which aims at correcting and improving internal problems in the market mechanisms in the market economic system. Under the premise that the resources are insufficient, the regulation actions should contribute to the rational allocation of resources, the balance of interests between the stakeholders and the increase in the overall welfare. In order to achieve objectives of the public policy, the regulatory agencies can take different regulation modes, which include the admittance regulation, the price regulation and the quality regulation. Therefore, the Regulation Economics provides a quite good analytical framework for the government to manage and regulate the private kindergartens.The admittance regulation is the starting point for the implementation of the regulation for the private kindergartens. Based on some criteria and a series of measures such as the examination, the permission and the filing, the government imposes qualification restrictions on the market entrants. Compared to some other industries, the admittance regulation in the private kindergartens focuses more on the solution of insufficient and asymmetric information. By examining the qualifications of private kindergartens, the government can greatly reduce the number of kindergartens which deceive consumers by information superiority or exclude competitors by improper means to get profits. There are mainly two ways for examining qualifications of private kindergartens. One is that the government could require private kindergartens to enter the pre-school market, which must meet the standards developed by the government. In this way, the government can exclude the applicants that do not meet the national standards from the market. By developing standards for private kindergartens to enter the market, the government sends a signal to the market that those private kindergartens allowed to enter the market have already been qualified in terms of their educational qualities and levels, thus dealing with the problems of information asymmetry between the providers and buyers of the pre-school education services. The other is that the government can examine the private kindergartens which have already entered the market at regular intervals or from time to time to urge private kindergartens to maintain standards developed by the government. The government would disqualify private kindergartens which do not meet the standards developed by the government and exclude them from the pre-school market. It is thus clear that setting reasonable standards for kindergartens to enter the market and clarifying the regulatory process and the responsibilities of various departments are the most important factors for the effective admittance regulation and the origin of forceThe price regulation is the core of various regulations introduced by the government for the private kindergartens. At present, there are two kinds of important price regulation modes all over the world. One is the regulation model for the rate of return on the investment. The other one is the regulation model for the price ceiling. The basic principle for the regulation mode for the rate of the return on the investment is that a reasonable return on invested capital is added to the product costs to estimate the amount of sales, which in turn is divided by the sales volume to calculate the reasonable price of products. In China, in general, tuition fees of private kindergartens are fixed by adding a reasonable return to the school running cost. This method used to fix the price is called the cost-plus method, which is in accordance with the basic idea of the regulation model for the rate of return on investment. The highest charge standard of universal and low-cost private kindergartens is determined by the regulatory agencies by means of contracts or conventions and so on. The pricing for the tuition fee of the kindergartens should not exceed the upper limit of the regulatory price. Its core idea is similar to the regulation mode for the price ceiling. Both these two regulation modes have their own advantages and disadvantages. The key to regulate the tuition fee of the common private kindergartens is to determine the cost and the rate of the return on investment. Whether it is feasible or not to adopt the price ceiling regulation mode for the universal and low-cost private kindergartens, it depends on the financial support of the government. If the government does not offer the financial support, private kindergartens would not choose the price ceiling regulation mode. Based on the status quo of the current price regulation, checking the cost, identifying the rate of return on investment and increasing the financial support are the key to improve the price regulation.The quality regulation is put forward by the government to ensure the quality of educational services provided by the private kindergartens and prevent competition industries from providing inferior products and services, under the condition that the information is asymmetric. Based on certain standards, the quality of private kindergartens is checked and supervised. The pre-school education services are trustable, in most cases. Therefore, it is not easy for the consumers to quickly assess the quality of the pre-school education services that they get. It seems that the private kindergartens have an incentive to lower the quality of the services they provide to pursue short-term interests. To this end, the government usually regulates the quality of private kindergartens in the following ways. Firstly, prohibit specific acts, such as forbidding teachers to teach knowledge that should be taught in the primary school in the pre-school education. Secondly, establish the qualification system. Pre-school teachers and leaders must have some relevant certificates. Thirdly, establish systems to identify and check kindergartens. For example, make level assessment for private kindergartens and check the qualification of private kindergartens at regular intervals. Fourthly, implement the information disclosure system. The information disclosure targets should include both the private kindergartens and the government. Fifthly, implement the grant-in-aid system. For example, reward private kindergartens when they rank to the top.Establishing a market reputation mechanism is what the government should do in the future to regulate the quality of private kindergartens.Although aspects that admittance regulation, the price regulation and the quality regulation involve differing from each other, what they are jointly concerned about is to maximize the social welfare through regulations by the government. These three regulation modes are incentive and compatible for each other. When the government determines the admittance regulation, the government should take full account of the price regulation and avoid the substitution between the price and the quality due to the price regulation and the quality regulation.In short, the government should introduce some regulations on private kindergartens according to law, based on some public policy objectives to play a positive role in making up for the market failure of the pre-schools, promoting the equality and improving the efficiency. However, the overall regulation achievements are unsatisfying. There exists regulation failures caused by the absence, the redundant intervene and the dislocation of the government. The key to solve these problems is to re-regulate the regulators. The regulation failures are reduced through improving the quality of regulations introduced by the government to promote the full development of the private kindergarten.