The scientific-technical sphere in Russia

Over the last ten years, the system of higher education has undergone considerable change in the following areas:

        Goals - with an orientation towards the needs of the market, society, and individuals;

        Structure - decentralization (in contrast to Soviet centralized planning);

        Autonomy of higher educational institutions - introduction of private higher education; four- and two-year programs in parallel with the traditional five-year program; elimination of a bias towards engineering specialties;

        Financing - diversification of financial sources instead of a reliance solely on state financing;

        Content - increasing the humanitarian components in the curriculum, and diversifying programs and courses

The scientific-technical sphere in Russia is today experiencing times that are not the best. Despite the presence of significant scientific developments, the high level of education of personnel in the scientific-technical sector, the potential need of industry to modernize its production facilities, significant capital assets in the production and research spheres, and the presence of much accumulated capital in the country, innovation activity is developing poorly. The basic reasons for this situation go beyond the lack of coordination of the efforts of federal agencies, the insufficiency of investment resources, and the shortage of budgetary funds to finance scientific-technical programs that have been adopted. They also lie in the poorly developed nature of the domestic market for scientific-technical knowledge, the as yet undeveloped system for commercializing scientific developments and technologies, and the inconsistency of levels of development of the infrastructure for innovation activities at both the federal and regional levels.

Various branches of industry are seeing a curtailment of production of science-intensive products that set the engineering and technical standards. Innovation activities are being cut because of the impact of the low payment capabilities of customers for scientific-technical products in both the state and nonstate sectors of the economy. Under conditions characterized by severe demand limitations, enterprises are primarily reducing

The current Education modernization program takes root in the reform of the 1990-1992, reflected in the Law of the Russian Federation of 1992, however, it should not be regarded as a response to the challenge of uncompleted historical action, but as a strategy for building the human capital for a knowledge economy. Policy makers, researchers and practitioners in Russia share the view that education supports innovation and helps speed the diffusion of technology, the common platform for modernization program is that education quality and access are fundamental to sustainable economic growth.

In 2000 the Government of Russia approved the National Doctrine on Education. In the same year a five year program on education development was approved by the Federal Law. The resolution of the Government to take a leadership role in the reform was made explicit in 1999, 2000, 2001 when the federal budget allocations on education grew by fifty per cent annually, similar positive changes have taken place in the subjects of the Russian Federation. Allocations for education in 2002 consolidated budget exceeded the previous year expenditure by 64 % and comprised 4, 11 % of the Federal budget expenditure and 0, 73 % of the GDP, in 2003 - 4, 16 and 0,75 % respectively, the 2004 plan is 4, 47 and 0, 76 with 33% of the GDP for tertiary education.

However, the conundrum of how to build a sustainable system of financing promoting equity, quality and efficiency, is especially complex in a scare resources framework in a country like Russia. Before presenting the two most controversial tools adopted by the Modernization program as elements financial governance, it is necessary to highlight some of the cornerstones of the past twelve years' development.

The centrally regulated and financed system in the USSR rested on the "one work for life" principle. The choice of profession made at the vocational or higher education institutions level defined the individual's professional career, the upgrading institutes developed further the skills and competencies the person acquired in the previous levels of education. All institutions were financed through the federal budget. The quotas of specialists to be trained were defined by the respective Ministries. The total education expenditures amounted to up to 8% of the GDP and allowed to maintain a widely accessible system of relatively high quality.

Consequently to the shock therapy reform and the industrial recession of the early and mid nineties the state budget expenditures on education were cut down significantly, both in nominal and relative terms. For more than ten years the needs of the secondary school and tertiary education institutions have been underfinanced by more than two thirds, with the expected result of uncompetitive salaries for the teachers, depreciation of the equipment, obsolete character of the teaching materials. In 2000 the rational budget of educational institutions (calculated by the Ministry of Economy and Ministry of Education as the sum of minimal competitive salary equal to the average in the industry sectors, to prevent the drain of the staff from schools and twice the amount for tertiary education institutions, plus overheads, current and capital expenses) was covered by less than one third of the norm.

At the same time the demand for the education, especially higher education services, continued to grow. Following the provisions of the 1992 Law on Education and responding to the rising demand and the need to generate revenue the state educational institutions opened new programs and started enrolling commercial students. New non governmental universities and institutions have been set up. By 2002 their number amounted to 662. Thus, there has been a steady tendency for educational services market development. So far, so good. Not so good, though, if the phenomena is analyzed in more details.

The consequences of under financing; the relative withdrawal of the Government from the system, and, in view of absence of independent quality control institutions, often inadequate quality of education; lack of reliable information on the quality of education; on the current and forecasted labor market needs resulted in distortions in the educational services market, diversion of substantial amounts of funding into shadow flows and low quality of education of millions of university graduates. More than 3 million of economists, managers and lawyers graduated from more than 600 universities over the nineties. The received education inadequate quality results in their unemployability and subsequent need for further education. The system regenerates itself.

Not considering either the societal consequences of the above or the human waste here, we will focus on further financial losses for the education system itself. The households of both average and low income co-finance the education of their children in secondary schools at the level of about $200-400 and $100-120 a year respectively. The expenses born by the average income family for access of their children to tertiary education amount to $800 - 1500 a year, the amounts often do not flow into the educational institutions, but are paid for individual tuition of children to the teachers of the respective institutions. The practice is justified by the currently radically individualized and diversified tertiary education institutions entrance exam requirements. The amounts are foregone for the formal education system.

The low income families not able to afford spending more than $250-400 for preparation of their children to tertiary education, have to accept the low priced and low quality programs of for profit higher education institutions, thus leakage of funding diverted from effective institutions amounts to almost one billion of USD. The total loss resulting from the above described diversion of financing, the low quality of graduates and their unemployability is estimated at $3 - 3,5 billion.

The Modernization strategy aims to establish a system ensuring effective operation and use of resources, independent quality monitoring and control and efficient information flow to the learners. The Government must guarantee 1)adequate and free of charge information to the education institutions and control of the trustworthiness of the information; 2) independent and public control of the education quality, validation of the education programs, unified national tests at the secondary to tertiary education threshold; 3) subsidization of education. The two mechanisms presented further target to enhance the choices of the learners, increase effectiveness of the expenditures and promote equity. The proposed schemes operate in conjunction.

The Unified National Test is an instrument of the school leavers' knowledge assessment administered at their graduation from secondary education and an external quality control tool of the secondary schools education. The UNT results are used for application and enrollment into the tertiary education institutions. More important, the Government Individual Financial Obligations amount the university entrant receives depends on the individual's performance in the test. GIFO is an innovative subsidization mechanism allocating resources on an outcome-based principle. It can be compared to the Danish voucher system for tertiary education. However, being performance based it shares the responsibility for investment with the learner; administered at the national level the UNF enhances the access opportunities for school leavers; enrollment on the basis of UNT results serves to eliminate corruption; granting to tertiary education institutions freedom to set up the level of requirements to entrants within the UNT score and to price its services, GIFO system encourages the universities to compete for the best students.

There are a lot of heated discussions about the UNT and GIFO. Opponents argue that the test system does not permit to assess all aptitudes and knowledge, that it will be difficult to guarantee confidentiality of the materials and security of the tests administration. The concerns are not groundless, at the same time the truth is that the tests designed and piloted in the past three years do allow a transparent and fair assessment and that the transition period should provide for setting up a Federal - regional infrastructure of the test administration and public control over its transparency which would allow to diminish and eliminate possible malpractice and guarantee the test validity. In 2003 630 school leavers from 47 regions of the Russian Federation and 575 Higher Education Institutions participated in the experiment. UNT will become compulsory in 2006.

Another alleged danger voiced by the GIFO opponents is that it will deepen the gap between the urban and rural school leavers, as the latter do not receive the same quality of secondary education as the former. True, the level of quality differs, at the same time we have to accept the fact that the rural and far away oblasts school leavers do not have a lot of chances of entering central cities universities now, and the UNT will permit to assess their level of performance against the other applicants and apply to a tertiary education institution without relocation, thus increasing their chances of mobility, not diminishing them.

Transition to GIFO will allow alleviate the burden on the household budgets, more important it will enhance the consumer's freedom of choice. Having passed the UNT and receiving a certain score and the appropriate GIFO amount, the applicant has the choice of either entering the tertiary education institution with a matching price for tuition, or supplementing the amount, apply to a university with a higher tuition fee. The essential feature of the mechanism is the dependence of the GIFO amount on the level of UNT performance, which serves as an incentive for the tertiary education institution to compete for the best students. Whereas under the current system both a bright and a mediocre student studying on an non commercial basis generate the same amount of revenue, moreover, a poorly performing student paying a commercial fee for the degree program permits the universities to survive and reach the notorious one third of the above mentioned rational normative. GIFO will increase the chances of the low income families for better quality education, cut on the flow of financing of the low quality tertiary education institutions and channel the redirected flows to more efficient institutions.

Thus to wrap up the expected results of the described mechanisms: effectiveness - a better targeted and more cost effective system of education financing for the efficient functioning of which the Government bears responsibility; equity - a shared responsibility of the education process stakeholders; access - enhanced horizontal and vertical mobility through administration of the UNT; quality - external and market driven quality control through the NTF and enhanced freedom of choice for consumers. In 2003 630 school leavers from 47 regions of the Russian Federation and 575 Higher Education Institutions participated in the experiment. UNT will become compulsory in 2006.

The proponents of the reform are far from declaring the proposed mechanism a panacea, the scheme is a part of a systematic program and is to be introduced alongside with the other measures, some mentioned above, and with a great prudence. It does not eliminate the need to increase resource allocations on education by 15 % from the federal budget and 10 % from the territorial budgets in real terms for the ten forthcoming years. The synergy of all components is critical for the education modernization program success and will allow to approximate the required level of financing by 2010.

 The state support for institutions of higher professional education is an area of focus of the Priority National Project 'Education' aimed at accelerated the modernization of High Schools, the introduction of sophisticated educational programs, the integration of education and science, as well as the forming of new financial and managerial mechanisms in the Russian Institutes of Higher Education.

       The support for Institutions of Higher Education is carried out on a competitive basis. In the open creative contest Russian Institutions may take part by presenting their innovative educational programs, which are designed to be implemented within two years.

       The Institutions of Higher Education whose innovative educational programs win the contest will receive state support from the Federal Budget to the amount of 200 to 1,000 million rubles. The volume of financing from the Federal Budget is 5 billion rub (2006), 15 billion rub (2007) and 20 billion rub (2008).

       Innovative educational programs must provide for the following:

       The introduction into educational practice of new and qualitatively sophisticated educational programs;

       The application of new educational and information technologies, the introduction of progressive forms of organization of the educational process and active methods of instruction as well as teaching and methodical materials corresponding to modern world standards;

       The high quality of instruction provided within contemporary systems of quality management;

       The integration of education, science and innovative activities; and

       The creation amongst graduates of professional abilities, which guarantee their competitiveness on the labour market.

       The winners of the contest get state support through the provision of grants. The grants are allocated for the purpose of the acquisition of laboratory equipment, the development and acquisition of software and methodic data, the modernization of the physical infrastructure, the raising of the qualifications and professional re-training of the scientific, educational and other personnel of the Institution of Higher Education.