Abstract: The legal expenditure policy in the educational sector is the mandatory rules for educational budget. The investigations on the total and incremental educational input show that the problems of soft budget constraints are occurring in China’s current educational funding. The effects of the policies are greatly reduced because of vague policy itself, “shrinking style” of budget estimate strategy, the management style of over emphasizing input while overlooking performance, lack of coordination between department regulations and the Budget Law, etc.. Therefore, we need re-normalize the legal expenditure policy based on the premise of recognizing its reality, at the same time we should also establish the performance-oriented budget management mode, and gradually widen the sources of educational funds.

Key words: legal expenditure policies; educational appropriations; soft budget constraints; total educational input