The free-tuition image of China's government-supported compulsory education in rural areas was no doubt tarnished as auditors discovered widespread random fee collection, witholding and embezzlement of government funds.

The National Audit Office (NAO) said on Friday that schools in 54 counties had illegally collected a total of 51.1 million yuan (US$7.4 million) from students from January 2006 through June 2007 on fabricated or prohibited excuses.

Rural schools collected money from students either in the name of donations, after-school training, exam fees or even bicycle consignments, according to a statement published on the NAO's website.

The NAO found schools also acted against rules as agents of other institutions to collect fees totaling 111.8 million yuan. This included 66.3 million yuan for tutorial books, 33.5 million yuan in insurance fees and 12.1 million yuan for school uniforms or physical check-ups.

Schools collecting such fees for other institutions made it appear compulsory for students who should have had the freedom to decide whether to buy such books or insurance. Some schools may have profited from such duties by exaggerating the exact sum of money or receiving rebates, an NAO official surnamed Wang told Xinhua.

Auditors also discovered embezzlement of government funds for compulsory education at schools in 46 counties, out of the 54 in total, involving 115 million yuan due to poor management.

The embezzled funds were used to construct school buildings, pay for teachers and other school employees, daily administration of schools and vehicle purchase.

The messy management also saw about 25 million yuan of public school funds go into 129 personal accounts, according to the NAO.

Bao Guoming, head of NAO's civil service department, said the poor management was a result of lax government supervision and poor internal control at schools.

Some poor counties were also more likely to misappropriate the funds exclusively for compulsory education to pay for old debts and build school houses with limited support from local governments, he said.

China had pledged to make all rural students free from tuition and other incidental fees to promote the nine year compulsory education in the countryside and lessen the burden of farmers. It also offered free textbooks and subsidized boarding fees for poor students.

Funds to support such compulsory education in rural areas are co-financed by the central and local governments.

The NAO findings also showed investment in compulsory education had increased by more than 20 percent. Some witnessed 30 percent growth, with the central government and provincial governments offering more funds, Bao said.

In the 54 counties, funds from the central and provincial governments were lifted to nearly 30 percent of the total in the first half of 2007, up from 21 percent for all of 2005.

However, county schools were still running under heavy burdens of huge debt, the NAO said.

The county schools paid off 863 million yuan in debt from the end of 2005 through June 2007, but another 679 million in new debt was added. This left their combined outstanding liabilities at 2.69 billion yuan, an average of 49.78 million yuan for each county.

A sample research showed schools had borrowed money to build new school houses, renovate unsafe buildings, buy teaching facilities or pay off old debt.

When schools could not afford to clear their debt, forced closure of schools and classes had taken place, NAO said.

(Xinhua News Agency July 5, 2008)