Funding of higher education in Russia

G. AndroushchakHSE

Plan for the talk

• ‘Showroom’– Scale,– Funding

• ‘Behind the curtains’– Research– Contribution to the economy

• Incentives for change

‘Showroom’

Scale, funding

Institutional structure, 2008

• Public universities (~ 6.2 mln. students)– ‘heads’ ~ 660– regional offices ~ 1060

• Private universities (~ 1.3 mln. students)– ‘heads’ ~ 480– regional offices ~ 1000

Student body of universities: Number of students enrolled, thousand

1985

1990

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

0

1000

2000

3000

4000

5000

6000

7000

8000

budget tuition

19851995

19971999

20012003

20052007

0

1000

2000

3000

4000

5000

6000

7000

8000

full-time part-time (distance)

Number of students per 10 000 of population

Finlan

d

Russia,

2008USA

Australi

aKorea

Slova

kia

Greece

Portuga

l

Chech Rep

ublic UKFra

nce

Turke

y

Mexico

Belgium

0

100

200

300

400

500

600

700

800

540467

427

158

124 235

Tertiary educationSecondary professional (~US community college)

20002001

20022003

20042005

20062007

20080.0

1000.0

2000.0

3000.0

4000.0

5000.0

6000.0

Preschool SchoolPrimary professional

Public funding of higher education (65-70% of financial resources)

(PPP US$)$US per academic year 2000=100%, adjusted for inflation

20002001

20022003

20042005

20062007

20080.0%

50.0%

100.0%

150.0%

200.0%

250.0%

300.0%

350.0%

400.0%

450.0%

500.0%

Secondary professionalTertiary

USA

Sweden

Norway UK

Netherlands

Austria

Australia

Belgium

Germany

FinlandOECD

Ireland

France EUIsr

aelSpain

New Zealand

Iceland

Korea

Sovenia

Chech Republic

Russia, 2

007 (PPP)

Mexico

Russia, 2

009 (x-ra

te)

Russia, 2

005 (PPP)

Russia, 2

008 (x-ra

te)

Estonia

Russia, 2

005 (x-ra

te)

Russia, 2

000 (PPP)

Russia, 2

000 (x-ra

te)0

5000

10000

15000

20000

25000

30000

Russia 2000-2009 (x-rate $US)

Russia 2000-2007 (PPP $US)

Public spending on per FTE ‘budget’ student in $US(compared to total spending per FTE student in OECD countries in 2006, $US)

Private funding (30-35% of financial resources):

• What families actually pay for?– Official tuition (if any)– Additional education (languages)– Sports– Private tutorship (subjects from curriculums)– Preparation for USE, “olimpiada’s”– Preparation of home assignments, essays, theses– Corruption

Tuition trends in nominal terms, 2000=100%

2000 2001 2002 2003 2004 2005 2006 2007 20080.00

1.00

2.00

3.00

4.00

5.00

6.00

PreschoolSchoolPrimary professionalSecondary professionalTertiary

Private funding of higher education on 2000-2008

20002001

20022003

20042005

20062007

20080.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

12.219.729.440.651.761.774.186.0

100.0

Registered payments

TertiarySecondary pro-fessionalPrimary pro-fessionalSchoolPreschool

20002001

20022003

20042005

20062007

20080.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

17.528.3

42.158.2

74.288.5

106.3123.3

143.4

Payments, including non-reg-istered

‘Behind the curtains’

Research, contribution to economy

Structure of public funding and spending of public funds by universities

(‘Rosobrazovaniye’)

46%

18%

22%

15%

Spending

PayrollOther current expenditureOther expenditureInvestments

96.21%

2.17% 1.00%

Funding

InstructionBasic ResearchCapital In-vestmentResearch in ed-ucationOther

Are students going to work within the field of their education?

Agriculture and forestry

Physical education

Humanities

Foreign languages

Education

Services

Economics and social sciences

Natural sciences

Engineering sciences

Information technology

Arts

Health

17.6%

30.8%

34.8%

40.2%

43.9%

45.9%

46.8%

47.2%

49.3%

49.5%

57.2%

79.7%

76.5%

42.3%

46.6%

43.9%

36.8%

43.1%

44.1%

38.2%

38.2%

34.5%

34.9%

18.6%

5.9%

26.9%

18.6%

15.9%

19.3%

11.0%

9.1%

14.6%

12.4%

16.0%

7.9%

Very likely Not sure Unlikely

What employers consider important for hiring decisions

Univ

. rep

utati

on

Cour

ces t

aken

Cred

its, g

rade

s

Reco

mm

enda

-tio

ns (e

mpl

.)

Form

al e

xpe-

rienc

e

0

10

20

30

40

50

60

70

22

10 10

39

60

1 - not important 2 34 5 - very important

Quality of professional education(% of employers who consider qualification of graduates 3 and lower out of 5)

2006 2007 20080

10

20

30

40

50

60

70

41

3538

4550

47

54 56

64

HEI2-year collegesvocational schools

Employers’ collaboration with institutions

2005 2006 2007 2008 20090

10

20

30

40

50

60

70

80

41

50 4845

67

institutions of higher educa-tion2-year collegesvocational schoolsnot ready to collaborate with institutions of pro-fessional education

No? incentives for change

Public funding momentum and accountability problems

Specific requirements and educational migration barriers

Public funding momentum

• The probability for a university of public funding increases in 2000-2006 was 95% due to absence of means-tested mechanisms– No need to worry about demand

• Ratio of local public finance fluctuated in the range of 4-5%– No need to worry about serving local communities

• University funding constitute 1/3 of appropriations atop of interbudget transfers from federal to local governments– Great lobby of local governors pressing federal authorities to

increase public appropriations

Accountability problems

• Most of the universities are public. The accounting principles are just the same as for any other public organizations– no ‘separate’ accounting for different programs (majors/levels)

• Accountability systems are still based on the soviet ‘procurement’ principles: – counting the heads of doctors, chair- and desk-legs etc.

• Student attainment is measures by the outdated ‘in-house’ tests

• No relevant graduates employment data is available– no good instrument for outcomes

Specific entrance requirements and educational migration barriers

• Pre-2008 there was no Unified Testing of High School graduates; universities formed admission exams themselves– ‘Want to come to us – pay us to get in’

• private tutoring• ‘shadow payments’

• Shortage of dorms and no campus-culture– No educational migration

• Percentage of ‘migrants’ <15%

– Local (limited) competition

Solved by an SAT-like Unified State Examination

Nature of limited competition: what do universities compete for?

• Informally for federal transfers:– Universities

• admit budget-supported students, who show good results at entry exams

• admit commercial students who don’t qualify for budget support– require them to pay tuition that is lower than per-pupil budgetary

spending on budget-supported students

• Federal transfers’ proportion on payroll is limited• Tuition compensates for the limitation– Universities compete for ‘paying’ students

What might save us

Demography,Unification

Demographic momentum of the first half of 2010s

0 5 10 15 20 250.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2000200520102015

Age, years

Age

coho

rts,

mln

. kid

s

Thank you!

How to calculate in $US: exchange rate and purchasing power parity puzzle of 2000s

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

0

5

10

15

20

25

30

35

Exchange Rate PPP

Why exchange rate US$ instead of PPP US$?

• PPP = How much economic agents directly pay for products/services

• Half of the students don’t, hence education PPP low

• However, about 14,5% of actual household expenditure is not visible

• About 28,7% of actual household expenditures take the form of auxilary expenditure

Gross Domestic Product

Actual individual consumption

Food and non-alcoholic beverages

Alcoholic beverages

Tobacco

Clothing and footwear

Housing, water, electricity, gas and other fuels

Health

Transport

Education

Final consumption

Household final consumption

Government final consumption

12.7

11

16.6

17.2

4.15

26.9

5.52

4.68

21.2

2.78

10.8

13.4

6.41

Ratio of tuition per year of studies to per year spending per yearly spending on budget supported

student across regional universities

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лика М

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я област

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Пензен

ская о

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Тамбовск

ая област

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г. Москв

а

Респуб

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я област

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ий край

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область

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область

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я област

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бласть

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бласть

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ая област

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Ростовск

ая област

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область

Респуб

лика Удмур

тия

Калуж

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Новоси

бирская о

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Ивановск

ая област

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Респуб

лика Кал

мыкия

Новгородска

я област

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Краснояр

ский кр

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Респуб

лика Сах

а (Яку

тия)

Московск

ая област

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Респуб

лика Хак

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Респуб

лика Адыгея

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респуб

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Респуб

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Осет

ия0%

20%

40%

60%

80%

100%

120% In 2007 only 32 of 660 universities subsidized public students with private funds