Funding of higher education in Russia G. Androushchak HSE

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

Number of students per of population

Public funding of higher education (65-70% of financial resources) (PPP US$) $US per academic year2000=100%, adjusted for inflation

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, olimpiadas – Preparation of home assignments, essays, theses – Corruption

Tuition trends in nominal terms, 2000=100 %

Private funding of higher education on

Behind the curtains Research, contribution to economy

Structure of public funding and spending of public funds by universities (Rosobrazovaniye)

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

What employers consider important for hiring decisions

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

Employers collaboration with institutions

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 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 dont 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

Thank you!

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

Why exchange rate US$ instead of PPP US$? PPP = How much economic agents directly pay for products/services Half of the students dont, 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

Ratio of tuition per year of studies to per year spending per yearly spending on budget supported student across regional universities In 2007 only 32 of 660 universities subsidized public students with private funds