Provincial Fiscal Decentralization On Public Education Expenditure

In 1994,system of tax distribution solved the problem of low “two portions” in China,and it improved the ability of central government to control the macroeconomic system.However,the reform of tax system did not stipulate the fiscal decentralization system below the provincial level.The local government would determine the fiscal expenditure and fiscal revenue at all levels of it regarding the financial relationship between the central government and the provincial government by itself.As a result,there is no strict relationship between revenue and expenditure in local government under provincial level.At the same time,by the imperfections of China's investment and financing system and the assessment mechanism of officials,local governments tend to promote economic growth through extensive investment infrastructure construction,ignoring the supply of public goods with positive externality,like education.Then it leads to insufficient investment in education,which affect the level of education and economic development ultimately.In recent years,the share of public education expenditure of municipal government in the northeastern region has fallen sharply on the proportion of fiscal expenditure,and the public education investment has been insufficient.Therefore,the three provinces in the northeastern provinces have introduced ‘the Outline of the Medium and Long-term Education Reform and Development Plan(2010-2010)',and put forward the "priority development" of education,giving priority to financial investment to meet the priority of education and public resources to meet the priority of education and manpower resource development needs.Effectively play education as the cornerstone of the revitalization of the northeast old industrial base.However,due to fiscal decentralization and imperfect administrative supervision mechanism,the municipal government tends to reduce the expenditure of local education under the limited financial resources leading not obvious public education expenditure growth.It affects the improvement of regional innovation capacity and upgrading of industrial structure,and it is not conductive to the transformation of economic growth.Considering the input and distribution of public finance resources will directly affect the level of public education development,this paper uses the panel data of 36prefecture-level cities in northeast China from 2010 to 2015 to calculate and analyze the fiscal decentralization of municipal government in northeastern region.This paper also uses the panel regression model to calculate the degree of financialdecentralization and public education expenditure to find out the problems in public education expenditure of Northeast China.Then put forward the targeted solution for the development of public education.