Financial situation of the Hong Kong Examinations and Assessment Authority
Date of sitting: 13 November 2002
Asked by: Hon SZETO Wah
Replied by: SEM
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:
- 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;
- whether HKEAA has taken any measures to curb its persistent financial deficit; if so, of the details; and
- 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?
- 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:
Income HKAL/HKCE Exams161,112158,979158,150155,741 Overseas and professional Exams28,33428,85327,83528,557 Language Proficiency Assessment for Teachers(LPAT)2,6905,0704,9465,364 Basic Competency Assessments (BCA)-4,54920,43028,758 Sale of publications14,63113,84914,73514,960 Bank interest9,2667,7862,4662,851 Other4,0874,2413,8183,861
Expenditure Staff costs92,118101,587114,940117,310 Other personnel expenses83,01080,55687,83386,829 Admin/Operation31,39934,25045,22046,740
Recurrent surplus (deficit)13,5936,934(15,613)(10,787) Non-recurrent expenditure6,3463,55813,5007,013
Surplus (deficit)7,2473,376(29,113)(17,399800) Reserve60,93664,31235,19917,399 % of total annual income28%29%15%7%
- 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:
LPAT (excluding admin overhead)1,3873,4433,7064,121 BCA (excluding admin overhead)4,36824,01428,758 Establishment of Research and Communication Divisions1,8502,9343,592 Other additional staff1,4021,4444,205 Enhancing proofreading and assessment of question papers for HKCE/HKAL Exams421,0521,052
Non-recurrent expenditure Renovation of building3,3762,0635,490246 Computer systems2,3557714,8605,217 Research projects-1541,000- Consultancy service5664243171,450 Furniture and equipment491461,833100
* 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.
- 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.
- 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.