An illogical way of funding universities

Abnormalities and lack of transparency in the way Ukraine’s higher education system is financed are a result of dismantling the Soviet system of state administration over 20 years ago – and the failure so far to replace it with a new one.

The old, totalitarian model of financial distribution conflicts with new market principles. It doesn’t work, but at least the old system was based on a logic derived from the dominant ideology of the time.

The pattern of higher education financing in Ukraine today is not based on any logic at all: neither a market nor a totalitarian model. And the main problem is that it goes against the needs of Ukrainian society and the national interests of the state.

The funding system

Ukrainian universities are being financed through a system in which the state requests that a specified number of specialists be trained in different institutions of higher education.

A budget for training one specialist in a certain profession is drawn up; it includes professors’ salaries, equipment, utilities and so on. Then a total sum can be calculated, depending on the state’s need for specialists in a certain profession, and this sum is transferred from the state budget to the university account.

Students, who are taught upon receipt of these funds, do not pay for their education themselves.

But that only accounts for the so-called ‘basic funding’ in the university budget. It is supplemented by a ‘special fund’, made up of money brought in by students who do pay for their education themselves or are sponsored by other, legal entities. The state automatically includes the special fund money in the state budget.

The university can only spend this money after the state approves the costs estimated and gives its special permission. The funds are held in the Treasury and not in deposit accounts in banks.

The state controls every step of how universities spend money during every calendar year.

Anothe, much smaller part of a university’s budget consists of so-called ‘other revenues’ – mainly income from leasing university premises and from providing additional services.

Private universities do not receive the basic state funding, and their budgets are made up only of fees paid by students. Most Ukrainian families cannot afford to pay higher education fees. Therefore, private higher education institutions enrol only those applicants who can pay and do not apply any selection criteria. That is why they cannot compete with state universities.

Flaws in the system

The main problem is the bureaucracy associated with the basic state funding system. The funds allocated by the government from the state budget go to the Ministry of Education and Science.

After that, nobody has any appeal against the education minister’s decisions, which can be very subjective. The minister basically has sole discretion over how much money each state university gets. The situation looks like the plot of a satirical play, but it is all totally serious.

Arthur Hauptman, a well-known American expert in higher education financing, worked in Ukraine this year and wrote about the main principles that should be taken into account with regard to state funding of higher education. Practically all of them are being ignored by the Ukrainian state. I will mention only some.

First, the amounts of funding available should be determined by elected officials. In matters of distribution of taxpayers’ money, civil servants cannot be empowered to make decisions.

In Ukraine, elected officials can participate in the process only at the stage of voting the state budget in parliament. But then they do not discuss real needs; they can only expand or cut the budget. The amount of basic funding for higher education is decided by professional bureaucrats.

Second, according to Hauptman, the process of distributing public funds must be kept well away from any sniff of political influence. ‘Buffer’ bodies need to be established to resolve the problem of public funds distribution, and they must be made up of representatives from government and from educational institutions.

Educational institutions distribute funds more effectively than governmental bodies. Nevertheless, in Ukraine the distribution of state funding for higher education is decided by the Minister of Education and Science at his discretion.

Third, in Ukraine there are different visions of the aims of state financing. Is the priority to provide broader access to higher education for young people or to improve the quality of higher education? It is unclear. This issue was debated during the discussion on the Draft Law on Higher Education, with the former being favoured by those taking part.

Fourth, state financing must balance both criteria – quality and access. But quality control is still an issue in Ukraine. The government ignores university rankings, and the education ministry is viewed as the expert on quality issues, despite the fact that it does not possess any objective data on quality and does not commission any research into this.

The authors of the Draft Law on Higher Education, which would replace the current rules in Ukrainian higher education with more transparent ones corresponding to Western funding practices, tried to take into account both quality and access criteria.

The teaching loads of faculty were considerably decreased through reducing the ratio of students to professor. For bachelor level, the maximum ratio of professors to students is 1:10. For masters level it is 1:6, and it is 1:3 for PhD level. This will help improve higher education quality.

According to the draft law, state funding of universities must correlate with the real demands of the labour market and the national economy.

Financing from the state budget for undergraduate degrees must correlate with the amount of money needed to train 100 students in vocational schools and 180 students in universities, academies and institutes per 10,000 people. In addition, the total amount of state funding must cover no fewer than 51% of secondary school graduates every year.

Distribution of state funding must also correlate, according to the draft law, with the status of higher education institutions. The working group did not include such important market criteria as national and international rankings. Many experts and government officials were not ready for such an innovation and the working group was set up according to the principle of consensus.

Funding bias

The point is that the above-mentioned draft law proposes distribution of state funding under a procedure determined by the government.

In a struggle over the assertion of university autonomy in Ukraine, Kyiv-Mohyla Academy (KMA) came into conflict with Minister of Education and Science Dmytro Tabachnyk. In 2011 he cut state funding for the academy without providing an adequate reason.

The paradox of the situation is that KMA holds leading positions in all Ukrainian rankings of higher education institutions, and many of its educational programmes are unique in today’s Ukraine.

That is why the university applied to the Circuit Administrative Court of the city of Kyiv with a claim against the ministry, setting a precedent for the whole post-Soviet region.

The KMA claim is based on its aim of asserting the public interest in higher education, including the interest of Ukrainian taxpayers, and the need for the state to be transparent in the way it finances higher education, which would impact on its quality.

The Circuit Administrative Court of Kyiv came down on the side of the ministry. In a decision dated 8 February 2012, it said that distribution of state funding is the exclusive right of the Ministry of Education.

The court did not take into account that by cutting funding of one of the best Ukrainian universities, the minister was acting against the labour market’s need for high-quality specialist education.

Nevertheless, the court ruling led to the ministry publicising information on how state funding is distributed between universities, for the first time. In addition, the court acknowledged that there is no system for distributing state funding in Ukraine, and there are no rules or guidance set down on paper that bureaucrats must follow.

So the decision to back the minister’s right to dispose of public funds at his discretion seems paradoxical. KMA lodged a complaint at the Circuit Administrative Court in Kyiv, but that complaint has not yet been considered.

Опубліковано у Університет. Додати до закладок постійне посилання.

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