Coalition party leaders agreed in a meeting on February 23 to change the labeling funding – over NIS 1 billion worth – for haredi (ultra-Orthodox) educational institutions to avoid legal hurdles, UTJ chairman Yitzhak Goldknopf wrote to Cabinet Secretary Yossi Fuchs on Friday.
According to the letter, which Goldknopf labeled as “urgent,” the party leaders had agreed that over NIS 1b. in the 2025 budget proposal that are currently labeled as funds “allocated to implement political agreements,” commonly known as “coalition funds,” will instead enter the budget base as regular funds.
The funding in question has two purposes: to overcome the loss of daycare subsidies to 7,000 haredim in which the military-age father has not reported for IDF service; and to increase the salaries of employees in the private haredi education systems.
Both are legally problematic. According to the Attorney-General’s Office, the government cannot circumvent the loss of daycare subsidies by finding other funds to support families of yeshiva students since this would serve as a financial incentive for them to continue evading IDF service, which is illegal.
In addition, the A-G’s Office and the Education Ministry’s legal adviser have blocked state funds to private haredi institutions that do not meet the necessary criteria laid out in Education Ministry directives, such as sufficient training for teachers and minimal levels of “core curriculum” studies, including English and mathematics.
Funds labeled as “coalition funds” require specific legal approval to be distributed. However, funds that are part of the base of the budget do not require the same levels of approval.
In addition, funds that are part of the base of the budget automatically remain there in the ensuing years unless specifically removed. This raises the chances of the funding becoming permanent.
A draft of a government decision that appears as an appendix to Goldknopf’s letter said that a “professional and legal examination” had concluded that funds that had been deemed “coalition funds” for the past 10 years no longer needed to be labeled as such.
However, according to a source with knowledge of the matter, the attorney-general and the Finance Ministry’s legal adviser had not approved this conclusion.
Criticism from finance ministry officials
In response to criticism by the opposition over the significant hike in coalition funds under the government, Finance Minister Bezalel Smotrich indicated in the past that he intends to lower them by changing their label and making them a part of the regular budget. However, the move faced criticism from Finance Ministry officials.
The 2025 budget is currently being prepared by the Knesset Finance Committee and must pass into law by the end of March, or the government will fall. According to the most recent government decision on the matter, in late November, the 2025 budget will include slightly over NIS 5b. in coalition funds.
However, the government has yet to approve the details of these funds. The government was reportedly set to approve the details on Sunday, but removed the issue from Sunday’s weekly meeting agenda in the wake of Goldknopf’s letter.
Goldknopf, on Sunday, put out a statement detailing what he claimed were numerous violations of the coalition agreements his party signed with the Likud prior to the government’s formation in December 2022.
These included passing a Basic Law: Torah Study prior to the passing of the 2023 budget; funding two projects involving food stamps for poor families; inserting the budget for yeshivot into the base of the budget already in 2023; forming a new government body within the Jerusalem and Tradition Ministry to “strengthen and fortify tradition throughout the State of Israel”; and, perhaps most importantly, entering the two major privately run haredi school systems already in 2023 into a labor agreement called ofek hadash (“new horizon”).