The major purpose of this study is to analyze the current system of the arbitration subsidies among 25 autonomous districts in Seoul Metropolitan City and propose more improved estimation method for the standard fiscal need of arbitration subsidies. There has been financial gap among 25 autonomous districts in Seoul since the introduction of local self-governing system in 1995. The different financial capacity between autonomous districts has produced the difference of quality in administrative services and the imbalance of regional development for the districts. However, the municipal ordinance pertinent to the arbitration subsidies could not have been revised over 12 years due to the different interests among 25 autonomous districts. In this study, we analyze the budget of 25 districts for the period 2006-2008 and propose the improved estimation method for the standard fiscal need of arbitration subsidies based on the administrative need of each district. Also, we re-classify the number of estimation item and unit practically to reflect the actual administrative needs for each district. Although the estimation method for the standard fiscal need of arbitration subsidies is improved considerably through this study, the quantitative method is not the only way to resolve the financial gap among these districts. For the fair redistribution of financial resources, Seoul Metropolitan Government needs to consider the financial conditions of each district and also 25 autonomous districts must increase the efficiency and prevent moral hazard in their financial management.

The major purpose of this study is to analyze the current system of the arbitration subsidies among 25 autonomous districts in Seoul Metropolitan City and propose more improved estimation method for the standard fiscal need of arbitration subsidies. There has been financial gap among 25 autonomous districts in Seoul since the introduction of local self-governing system in 1995. The different financial capacity between autonomous districts has produced the difference of quality in administrative services and the imbalance of regional development for the districts. However, the municipal ordinance pertinent to the arbitration subsidies could not have been revised over 12 years due to the different interests among 25 autonomous districts. In this study, we analyze the budget of 25 districts for the period 2006-2008 and propose the improved estimation method for the standard fiscal need of arbitration subsidies based on the administrative need of each district. Also, we re-classify the number of estimation item and unit practically to reflect the actual administrative needs for each district. Although the estimation method for the standard fiscal need of arbitration subsidies is improved considerably through this study, the quantitative method is not the only way to resolve the financial gap among these districts. For the fair redistribution of financial resources, Seoul Metropolitan Government needs to consider the financial conditions of each district and also 25 autonomous districts must increase the efficiency and prevent moral hazard in their financial management.