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Financial situation of the Hong Kong Examinations and Assessment Authority

LEGCO QUESTION NO.17

Date of sitting: 13 November 2002

Asked by: Hon SZETO Wah

Replied by: SEM

Question:

It is learnt that the Hong Kong Examinations and Assessment Authority ("HKEAA") had a deficit of $30 million in the last financial year; the estimated deficit for the current year would amount to $17 million; and its accumulated surplus at the end of the year would only be about $17 million. In this connection, will the Government inform this Council:

  1. of the items of revenue and expenditure of HKEAA and their respective amounts for the past three years and for the coming year and, among them, of the new items of expenditure and their respective amounts as well as those items which were launched at the request of the Administration;

  2. whether HKEAA has taken any measures to curb its persistent financial deficit; if so, of the details; and

  3. as HKEAA is an administratively and financially independent statutory body, whether the Administration will give financial assistance to HKEAA in case the latter has an accumulated financial deficit; if it will, of the details; if not, the reasons for that?

Reply:

Madam President:

  1. The income and expenditure items of the HKEAA and their respective amounts for the past three years and the coming year are listed as follows: 

     
    1999/2000
    Audited
    ($000)
    2000/2001
    Audited
    ($000)
    2001/2002
    Provisional Estimated
    ($000)
    2002/2003
    Estimated
    ($000)
    Income        
        HKAL/HKCE Exams
    161,112
    158,979
    158,150
    155,741
      Overseas and professional Exams
    28,334
    28,853
    27,835
    28,557
      Language Proficiency Assessment for Teachers(LPAT)
    2,690
    5,070
    4,946
    5,364
      Basic Competency Assessments (BCA)
    -
    4,549
    20,430
    28,758
    Sale of publications
    14,631
    13,849
    14,735
    14,960
    Bank interest
    9,266
    7,786
    2,466
    2,851
    Other
    4,087
    4,241
    3,818
    3,861

    Total income
    220,120
    223,327
    232,380
    240,092

     
    Expenditure
    Staff costs
    92,118
    101,587
    114,940
    117,310
    Other personnel expenses
    83,010
    80,556
    87,833
    86,829
    Admin/Operation
    31,399
    34,250
    45,220
    46,740

    Total expenditure
    206,527
    216,393
    247,993
    250,879

     
    Recurrent surplus (deficit)
    13,593
    6,934
    (15,613)
    (10,787)
     
    Non-recurrent expenditure
    6,346
    3,558
    13,500
    7,013

     
    Surplus (deficit)
    7,247
    3,376
    (29,113)
    (17,399800)
     
    Reserve
    60,936
    64,312
    35,199
    17,399
    % of total annual income
    28%
    29%
    15%
    7%

    Notes: 
    - The financial year of the HKEAA is from 1 September to 31 August of the following year.
    - The detailed supplementary schedules to the 1999/2000 and 2000/01 audited income and expenditure account were tabled at the Legislative Council in 2001 and 2002 respectively.

    New expenditure items include the followings:

     
    1999/2000
    Audited
    ($000)
    2000/2001
    Audited
    ($000)
    2001/2002
    ProvisionalEstimated
    ($000)
    2002/2003
    Estimated*
    ($000)
             
    LPAT (excluding admin overhead)
    1,387
    3,443
    3,706
    4,121
    BCA (excluding admin overhead)
    4,368
    24,014
    28,758
    Establishment of Research and Communication Divisions
    1,850
    2,934
    3,592
    Other additional staff
    1,402
    1,444
    4,205
    Enhancing proofreading and assessment of question papers for HKCE/HKAL Exams
    42
    1,052
    1,052

    Total
    1,387
    11,105
    33,150
    41,728

     
    Non-recurrent expenditure
    Renovation of building
    3,376
    2,063
    5,490
    246
      Computer systems
    2,355
    771
    4,860
    5,217
    Research projects
    -
    154
    1,000
    -
    Consultancy service
    566
    424
    317
    1,450
    Furniture and equipment
    49
    146
    1,833
    100

    Total
    6,346
    3,558
    13,500
    7,013


    * After netting off savings from relevant measures to reduce costs.


    In 1999 and 2000, the Government has commissioned the HKEAA to provide services for the Language Proficiency Assessment for Teachers (LPAT) and the Basic Competency Assessments (BCA) respectively, at a service charge.

  2. The HKEAA appreciates the urgency to address the issue of financial deficit. It is now actively identifying ways to reduce expenses and to diversify sources of income. 

    On the former, apart from reducing pay level in line with civil service pay reduction, the HKEAA is also examining its expenditure item-by-item with a view to identifying scope for economy, including for instance, possible reduction in staff benefits and overtime pay, and reflection of deflation in various fees paid. Nevertheless, the HKEAA fully recognises the need to ensure that any economy drive should not prejudice the quality of its services to the community. 

    On the revenue side, noting the current economic climate of Hong Kong, the HKEAA's preference is to diversify sources of income rather than resorting to the convenient option of raising fees for the HKCEE and HKALE. In respect of income diversification, apart from the LPAT and BCA, the HKEAA has assumed new income generating services. For instance, since 1999, it has undertaken over 30 new overseas and professional examinations and will continue to be proactive in identifying and running new examinations for which there is a local demand. Furthermore, the HKEAA is now working with the Administration to seek to have the law changed to enable the HKEAA to conduct examinations outside Hong Kong. Though the primary objective of this proposed legislative amendment is to facilitate the promotion of Hong Kong as an education centre, it is anticipated that the conduct of examinations outside Hong Kong will provide a new stream of income to the Authority. The HKEAA is also exploring schools' request for feedback on students' HKCEE and HKALE at a fee.

  3. The HKEAA has been operating on a self-financing basis. The Administration notes that the HKEAA is now taking measures to address the problem of financial deficit and monitor the progress closely. At the moment, we do not envisage any need for subsidies from the Government.
Last revision date: 13 November 2002
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