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The necessity of provision, particularly by means of financial mecha nisms, of integration of research and education, the task of boosting the efficiency of consumption of resources in the integrated research and education sphere requires adjustment of principles of funding re search in the higher school. More specifically, one should ensure a re distribution of funds in favour of financing research on the basis of grants, development of contractual methods of funding R&D, along with the granting of the right to take part in tenders to research and educa tion institutions, regardless of their departmental affiliation.

4.2.4. Creating equal starting opportunities for receiving general education The need for equalizing the initial conditions for children from differ ent social strata requires introduction of a compulsory pre school edu cation, creation of conditions of ensuring the availability of a comple mentary education focused on shaping the childs successful develop ment, as well as that of his abilities. The integration of children that, due to different reasons, have no conditions for a successful development in their families into the system of the complementary education and the compulsory pre school education would give a considerable boost in their social and cultural potential.

As a result of implementation of the noted measures, the structure of the general education should take the following form:

1. Pre school education (12 years), underlying which are game forms and methods.

2. Primary school (4 years).

3. Basic school (45 years).

4. Profile school (2 years).

5. Complementary educations (through all the period of schooling).

To extend the students opportunities for choosing individual educa tion strategies, it is necessary to lower the educational load. In parallel with that, it is equally necessary to raise the level of compensation for the teachers pedagogical hour (by diminishing the standard hour based rate according to which the remuneration rate is computed). An individualization of classes and extension of the opportunity for choos ing subjects should be funded from additional budget and extra budg etary sources. A special line in the structure of the transformations should become a complex of measures that should ensure that once the educational load for students of small rural schools, specialized education institutions etc. is lowered, their free time is filled with other activities.

4.2.5. Modernization of financial and economic mechanisms in the education sector The financing of the educational system should rest upon the per formance based management. Each educational activity development program funded from the budget should contain a strict list of perform ance indicators, which will allow increase of efficiency of the budget spending.

The complexity of the system and its multifunctional and multi target nature necessitate employment of various financial instru ments. They should be employed as an integral system and in an op timal combination. Among these instruments there is a standardized per capita funding that enables one to ensure transparency of alloca tion of budget funds and link the volume of funding directly to the con sumer of a given educational service, following the money follows the student principle.

The standardized per capita financing in the system of general edu cation is presently tested only in a few RF Subjects (Samara oblast, Re public of Chuvashia, Yaroslavl oblast, among others). Since 2002 6 uni versities in 3 Subjects of RF have conducted an experiment on the GPEL based financing of the higher vocational training, while since 2003 18 universities form other Subjects of the Federation have taken part in the experiment in the imitation mode by providing information for assessing effects from the transition to a new mechanism of budget funding on their financial state.

Problems of the transition to the standardized per capita financing are mostly related to the lack of the necessary legal base, methodolo gies of computation of the respective standards by level of education, types and kinds of educational institutions. The development of the re spective legal acts and their passage, as well as the budget sector re form should help solve the problems.

Financing of general education institutions In the system of general education, there should be ensured a con sistent transition to the standardized per capita financing of educa tional institutions.

Implementation of educational programs by general education insti tutions is funded by the Subjects of RF in the form of subventions to municipal budgets, while their owner the municipality deals with maintenance of their material base.

The Subject of RF or the municipality itself funds educational pro grams for preschool institutions by means of subventions to municipal budget, while social services are co funded by parents, depending on the family income, and from the municipalitys social programs.

Complementary educational programs for children are co funded by municipalities and the Subject of RF. The latter allocates subventions to municipal budgets, or such programs can be co funded by the munici pality and parents.

Financing of the secondary and primary vocational training With the transfer of the public PVT and SVT institutions to the re gional level, the principal instrument of provision of the citizens consti tutional right for receiving vocational training of a respective level should become allocation of subventions to budgets of the RF Subjects coupled with creation of legal conditions for the sake of ensuring the federal levels control over the use of the noted educational institutions property.

It is necessary to ensure the transition to the funding of PVT and SVT institutions on the basis of budget funding standards differentiated ac cording to a given profile of vocational training.

To increase the technical equipment of PVT and SVT institutions and develop their material base, it is necessary to secure their financing on the basis of medium term targeted programs that suggest participation in them of both the Federation and its Subjects. There should be estab lished legal conditions for attraction of employers to contribute to the financing of the noted institutions, particularly on the basis of develop ment of long term relationships between the institutions and employ ers, with the latter sponsoring and organizing the production practice.

Mechanisms of financing the higher vocational training under the transition to the two level higher education Given the suggested transition to the two level higher vocational training system and application of the standardized per capita budget financing, it appears appropriate to introduce the following differentia tion of the budget financing standard on the Bachelor level:

- According to the USE results, as well as those of international, na tional and regional competitions and contests;

- According to profiles of training;

- With account of regional specifics.

As concerns the Master level, such a differentiation of the budget fi nancing standard should be made only according to profiles of training, for costs of training of, for instance, an economist objectively differ from those of chemist or nuclear power expert. Plus, there exist objec tive regional specifics (climate conditions, local labour compensation coefficients, etc.).

The application of other instruments of financing should also vary, according to a given level of higher education. Thus, educational loans should be more widespread specifically on the Master level. The rise in the educational loan system would allow a greater price rise in this par ticular segment vis a vis the Bachelor level, which will result in a higher quality of training. According to some computations, the annual budg etary financing of the Master programs can account for $ 7.510,000 in purchasing capacity parity equivalent. That can form a benchmark value for a university that is going to set the prices for those future Masters who will be receiving a paid tuition, and, accordingly, for the value of the educational loan. By contrast, as concerns the Bachelor level, universi ties may wish to broadly apply such a mechanism as financing of civil service and municipal staff training based upon subventions and subsi dies.

To ensure the availability of the higher vocational training to individ ual categories of citizens (such as those who completed their contract based services in the Army, handicapped, and other categories of citi zens that enjoy legally set enrolment benefits), it is intended to set greater standards of funding their education, which, however, implies the appropriateness of contraction in the number of such categories of citizens and more solid justifications for granting the benefits. As well, as long as the former contracted military staffs is concerned, it is also necessary to secure financing from the budget of their pre university training programs.

The transition towards the aforementioned new organizational and legal forms is possible only providing the introduction of new financing mechanisms of universities. It is possible to develop the following mechanisms of budgetary financing:

- The government commission to train the cadre for the civil service such a commission is allocated according to the standardized per capita principle;

- Financing the university's operations on the basis of GPEL;

- Introducing the mechanism of government (repayable) subsidies (GRS) to train specialists to deal the government and municipal needs;

- Financing the university's medium term development programs.

Government personal education loans (GPEL) The transition to the GPEL system puts the university financing in dependence on the number of its students and their USE results. It should be emphasized that while the differentiation of the standard of budget financing by the intensity of a given education program in terms of funding or by its regional nature is regarded as a technical measure and raises no particular objections (given the model of standardized per capita financing is accepted as a whole), its differentiation by USE results does raise serious concerns amid its opponents.

In addition to much attention the expert community pays to the GPEL system, the main reasons for viewing GPEL as a mechanism of budget financing are:

- by contrast to other models of standardized per capita financing of universities, the GPEL model was developed not only theoretically it has already been tested for three years, which allows to expose the universities' reaction to the change in conditions of budget fi nancing in an actual decision making mode (functioning);

- The GPEL model appears closely associated with the USE model, so all the problems related to introducing of the latter to this or that extent are extrapolated onto the GPEL mechanism.

We believe that it is hardly appropriate to consider processes of in creasing the efficiency of budget financing separately from assessing the efficiency of the use of the university's aggregate (budget and extra budgetary) funds. At this point, one should also take into account the population's effective demand for higher education in regional terms.

With the young having a low mobility and higher education enjoying a great social value, a re distribution of budget funds for the benefit of stronger universities or educational programs (specialties) may result in a price rise for tuition at the universities that do not enjoy an agitated demand, but play an important social role in a given region, or a surge in fees charged for non prestigious education programs.

Overall, as the 2003 volume of the budget financing of universities that took part in the GPEL experiment grew by 7.8% vs. the one ear marked according to the traditional procedures of allocation of budget resources, while the price rise for their tuition soared by 45%, it is still premature to argue there has been a rise in the efficiency of the con sumption of the universities' aggregate resources.

Government repayable higher education subsidies Employment of GRS is suggested as yet another mechanism of boosting the efficiency of budget expenditures on the university educa tion. It is envisaged that the training of the cadre that are needed for a normal functioning of the society (teachers, doctors, etc.), but do not enjoy the populace's demand will be fully or partly carried out on the basis of granting government subsidies to individuals that will be work ing according to the selected specialty upon graduation. Should they express their wish not to pick such socially significant jobs upon graduation, they will be bound to return the funds the government will have spent on their education. That de facto will constitute the transi tion from the current university targeted admittance to a system similar to the system of educational loans, with the government playing the role of creditor.

The GRS mechanism is also suggested to ensure the access to the university education for children from the needy families and/or remote territories, as well as rural school graduates. Should they fail to enrol in the budget funded university tuition programs, to receive GRS, i.e. the de facto right to receive the university education at the government ex pense, they will have to sign a contract on a compulsory appointment to a non prestigious, poorly paid jobs upon graduation. On the one hand, that would solve the problem of filling in such job opportunities, while on the other, ensures a compensation for a part of costs the government will have incurred in the event such graduates fail to fill in such vacan cies.

However, at this juncture there arise a number of issues related to efficiency of budgetary expenditures and tasks whose accomplishment these expenditures are supposed to ensure:

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