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1.2. Education 1.2.1. General state of the educational system Crisis in the Soviet educational system let itself known even in early 1980s of the last century. At the same time, there were proposals, which called on to the transition to the normative per student capita funding of the educational system and the introduction of a partial payment for education. However, practical realization of these pro posals only started with the enactment of the Law On Education in 1992. In particular, the Law envisaged a possibility to choose a school, private education, partial payment in the form of additional paid ser vices, which general and vocational education institutions could de liver above the state standard volume, as well as transition to norma tive per student capita funding. Thus, parents and students received greater liberty in choosing educational institutions whose range con siderably increased. Educational institutions received the right to de liver paid educational services, including accept paid students. Crea tion of nonpublic educational system manifested itself especially in the higher education system.

In 1990s together with a reduction in public expenditure on educa tional system growth in paid educational services at the different levels of educational system was posted. By the year 2003 the share of paid students in the overall number of students constituted 46 per cent against 9 per cent in 1995. Paid education growth was observed in the vocational education system (by the year 2003 the share of paid stu dents reached 39 per cent level). In the sphere of general compulsory and secondary school education as well as in initial vocational educa tion there was no considerable growth of paid service delivery. How ever, even in that sector there are separate educational institutions that get more than 50 per cent of the obtained volume of the extra budget ary funds. A sharp differentiation in compulsory volume of educational service delivery in general education took place between the regions and within a region. Major volume of funding was divided between 7per cent of the elite urban schools and rural schools (the latter received 3 to 4 fold more funds per pupil). Large scale urban school system was chronically under funded.

Advanced educational expenditure growth started in the year in comparison with the general economic indicators. In the period through 2004 budget funding growth per student in secondary voca tional education constituted 42 per cent, in general school education 39.3 per cent, in initial vocational education 27.1 per cent, in pre school education nearly 31 per cent. The lowest public expenditure growth per student was posted in universities and colleges 3.4 per cent. In spite of this fact the pay level in educational system remained one of the lowest in the country. According to the latest data, average payroll salary in educational system constitutes 43 per cent of the aver age payroll salary in industry and 53 per cent of the average payroll sal ary in the economy. At the same time, the weighted expenditure on education as share of GDP started to decline in 2004.

At present, the federal budget finances about 20 per cent of the total volume of public expenditure for education. The same volume of ex penditure comes from the budgets of the subjects of the Russian Fed eration. The local budgets carry on the main financial burden of educa tional institutions (60 per cent of expenditure). Local budgets finance 95.7 per cent of educational institutions regardless of their status. Initial and secondary vocational institutions started to be delegated to the ju risdiction of the subjects of the Russian Federation in 2004. This will result in the change in the structure of expenditure on education, by way increasing the share of regional budgets and, correspondingly, re ducing the share of the federal and local budgets in the consolidated budget.

Demographic drop exerts strong influence on the situation in the educational sphere in the Russian Federation. Demographic situation on a larch scale touched general schools: the number of students went down by 13.2 per cent from 1995 level. Latter fact resulted in a gradual reduction of a number of schools. The number of students will fall by 36.4 per cent by the year 2010. In initial and secondary vocational edu cation the overall number of students has barely started to decline. Ac cording to the forecast by the year 2010 the number of students in initial vocational education institutions must decline by 36 per cent and in secondary vocational education institutions by 26 per cent. Demo graphic drop resulted in the reduction of preschool institutions. How ever, at present the number of children between 1 and 6 years in creased. This fact led to a shortage of seats in kindergartens.

Higher professional education during last years posted growth of the number of students contrary to the general trend, which reflected a general reduction of the number of student. This fact is explained by the growth in the number of students in higher education. As a result, the number of school leavers is smaller than the number of university and college entrants. During last 15 years the number of school leavers reached maximum indicators. Growth in the number of students is fore cast to continue till 2006. Then there will be a decline, which will consti tute 16 per cent by the year 2010 in comparison with 2006 level.

On the whole, one can state that at present many problems of edu cational system remain, which does not allow saying that modernization of this sphere satisfies the society. Moreover, these issues and chal lenges require energetic and extraordinary measures directed at the eradication of crisis symptoms in the educational system.

One can separate the following major issues on solution of which eradication of the existing drawbacks in the educational system will de pend:

1) Maladjustment of curricula and educational techniques to the re quirements of contemporary society and economy Modernization of the structure of education and its curricula was the main objective in the Concept of modernization of Russias educational system. However, it touched mainly on the issues of educational plans of general education. Meanwhile, this issue is urgent for all levels of Russian educational system.

Acceleration in the rates of technology improvement leads to a change in approaches to the development of educational plans and educational technologies. In the circumstances of sweeping develop ment and widening of accessibility of the open information networks transfer of ready knowledge stops being main objective of educa tional process. Traditional education is becoming less attractive and its functional dependency declines.

2) Discrepancy between educational system and socio economic development requirements First of all, backwardness of the educational system manifests itself in the lack on part of vocational education of an adequate reaction to the labour market requirements. Over a quarter of higher professional education graduates and 30 per cent of secondary vocational educa tion graduates do not get a job according to their specialty after graduation. This results in the situation that employers invest more and more in the development of alternative educational establishments, such as corporate universities, training companies, firm training courses, thus trying to connect educational process with professional activity. Investment in alternative educational establishments leads to the drain on resources of the existing educational system including its personnel. This problem is very acute in initial vocational education, which is short of sufficient funds needed to purchase modern equip ment and educational and scientific literature and organize training of skilled workers capable to deal with up to date technologies. As a re sult employers pay little attention to the development of initial voca tional establishments. It leads to vicious circle, which is difficult to break.

Present Russian educational system does not feel itself responsible for the final results of its performance. Independent forms and mecha nisms of citizens participation, employers participation and profes sional organizations participation in educational policy development are not adequately developed. They lack in the independent assessment of the quality of education.

Lack of strong links between vocational education, scientific re search and practical activity results in the fact that curricula and educa tional technologies are becoming less adequate to modern require ments and do not guarantee compatibility of Russian education with global market of educational services. This fact does not permit Russian educational system to become compatible with the international educa tional system.

3) Shortage of instructors, teachers and managers of required level Due to low pay level public educational system becomes less and less competitive sphere of professional activity.

Low level of official pay of education workers and underdevelopment of additional legal remuneration mechanisms lead to growing volumes of shadow financial flows and widespread corruption in educational sys tem. The image of a teacher is falling. The outflow of qualified personnel is continuing.

Retraining and professional development system, which is becoming more obsolescent each year, does not permit to train personnel capa ble to develop innovative curricula and to work in with promising educa tional technologies. Administrative appointment becomes the most at tractive type of career growth for education workers.

Predominant low qualification of considerable part of administrative and managerial staff does not permit to develop educational system on the basis of applying efficient organizational and managerial forms and technologies.

Due to week reaction of traditional educational system to modern requirements and the shortage of qualified personnel result in a contra diction of public management mechanisms to the creation of favourable conditions needed for the development of educational system.

4) Contradiction of public management mechanisms to the creation of favourable conditions for educational system development Nonpublic forms of education, which started to appear in the early 1990s led to growth of new participants in the educational market along with the public sector, which preserves traces of the old sectoral or ganization. Educational network is starting to form.

Different social organizations even with business community partici pation are created. Professional associations and various structures of additional education, retraining and upgrading including commercial ones are formed. Representatives of these structures have different ideas about the necessary changes to be taken in Russian educational system and represent diversified interests in the sphere of education.

Due to this fact the management system of education faces two groups of objectives. One group is stipulated by the need to regulate the activities of the new participants of the educational process, to guarantee monitoring and quality control of education. The second group is aimed at creating mechanisms for disseminating positive ex perience appearing in the new conditions. Achievement of these objec tives requires implementation of finer mechanisms of management of the educational system.

Moreover, there are no developed mechanisms for attracting social organizations to the process of development and implementation of educational policy. Government standards so far remain the main in strument in the development of curricula. There are no conditions for the development of independent forms of assessing the quality of edu cation as well as mechanisms for determining, supporting and dissemi nating best practice examples in education. The normative legal base of educational system still remains incomplete and contradictory.

Declared tasks and objectives of reform in education considerably differ from the implementation results. This is due to the fact that each member of the educational community understands these tasks and objectives in his/her own way. As a result of this, it becomes very ur gent, on the one hand, to take into consideration all sorts of interests and, on the other hand, to create such implementation mechanisms, which can lead to the achievement of these objectives.

Modernization in the educational system, bringing it into line with the contemporary socio economic conditions can be realized only by way of fine tuning of the management system and gradual implementation of new managerial mechanisms.

1.2.2. Situation in separate segments of the educational system Let us take a more detailed view at each level of education.

Preschool education Even in the Soviet era, there was a shortage of preschool establish ments. For example, only 66.4 per cent of children of the preschool age attended preschool establishments. Between 1990 through 2002 pre school establishments network shrank by 44 per cent (first of all, at the expense of departmental kindergartens). However, due to the demo graphic reasons the number of preschool establishments was falling slower than the number of children attending them. Reduction in the number of children in the preschool establishments was followed by a reduction in the number of educators. However, in last years (2001 2002) a slow growth was posted14. This is due to a change in the trend for the first time since 1990, the number of children attending kinder gartens started growing.

Preschool establishments network is dividing into an elite and com mon ones in megalopolises and large cities (in medium size and small cities to a lesser degree). Children from the families with high income mainly attend nonpublic kindergartens, paid grammar schools, lyce ums, and nonpublic schools. Children from the middle income families attend kindergartens with relatively high charge and preparatory gym nasiums under well known schools.

We think that 95100 per cent of the children between 5 and 6.years must be able to attend preschool establishments. Meanwhile, at present this indicator comes to less than 60 per cent.

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