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[Archive] 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. 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%







 
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






  1. 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.

  1. 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.