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Originally GPEL was envisaged to personify budgetary financing. In this case efficiency improvement is achieved because the consumer starts really to dispose of a certain amount of budgetary funds. In this case the volume of funding of educational establishment depends on consumers choice, which stimulates educational establishment to im prove the quality of delivered services. Nevertheless, one cannot say that the number of students directly reflects the quality of rendered ser vices. The choice of educational establishment depends not only on the quality of rendered services but also on a whole number of other fac tors. For example, when vouchers were introduced in Great Britain in schools it turned out that low income families practically did not use the right of choosing a school because taking children to schools in differ ent regions was difficult for them.

In order to increase dependency of funding via GPEL system on the quality of education provided by an institution of higher education, it was decided to correlate this funding not only with the number of stu dents but also with the quality of students, which can be determined by an independent appraisal of the quality of knowledge. For this ap praisal the Strategy of the development of education proposed to intro duce in Russia a unified state examination (hereinafter USE) for the school leavers. Based on the results obtained at the USE a prospective student will be granted GPEL of a different category. The higher the re sults received at the USE the higher volume of financing will be his/her GPEL category. Correspondingly institutions of higher education (to be more preciseinstitutions of higher vocational education and secon dary vocational education) form different strategies aimed at creating their student contingents. These strategies take into account not one but two parameters: quantity (number) of students and the quality of their knowledge, including in money terms.

One of the disadvantages of this system consists in the lack of direct studies performance record at the institution of higher education. The volume of budgetary financing is determined by the level of knowledge of a school leaver and not by the level of knowledge of a student, i.e. it reflects performance results of an educational establishment of a previ ous level of education and not of an institution of higher education.

Besides, the level of government guarantees for a student in GPEL system is determined only by the USE results and in no way depends on the progress in establishments of higher education. From this point of view the GPEL system differs very little from the existing system. At pre sent, a student who studies at the expense of budgetary funds in case of poor progress all the same continues his studies at the expense of budgetary funds. However, a student who pays for his studies and shows good progress continues, with rare exception, to pay for his/her studies. This drawback in the GPEL system is difficult to overcome. In case GPEL category (and correspondingly financial provision of GPEL) began to depend on the examinations results, this would have become a big incentive for the institutions of higher education to overstate the marks regardless of the quality of the students knowledge, which would have led to the reduction in the quality of education. Changes in GPEL categories depending on the independent attestations of the students are feasible but very costly.

The fact that GPEL categories cannot be changes in the process of education is one of the reasons why Western universities and colleges do not introduce differentiation of budgetary expenses on education of students, except objective differences in capital intensive of educa tional programs. In other words, all the students who entered this insti tution of higher education on the given specialty are financed equally if it is a public institution. Different public institutions of higher learning even those belonging to the same specialty not infrequently receive dif ferent budgetary funding on a per student capita basis (this, for exam ple, is well pronounced in French universities). That is why students who entered prestigious universities and colleges get certain financial pre mium in comparison with the students who according to SUE results are granted GPEL of a low category and study in less known universities.

This fact later plays an important although not absolute role in finding employment by the graduates, etc. In the developed countries higher examination results to a greater extent determine his/her future educa tional career. However, there are no western universities where stu dents of the same group are financed differently by the government.

Although students from low income families can receive additional as sistance from the government in various forms.

Implementation of GPEL together with SUE was one of the anticor ruption measures in the entry to institutions of higher education. In the estimation of Foundation Indem20 households spent up to 1 billion of dollars in order to enrol their children into institutions of higher learning in 2001. About half of this amount constituted bribes given at the en trance examinations. The other half constituted payments to teachers, for preliminary courses, for studies in specialized classes and other in formal payments. Higher School of Economics received similar estima tions, according to which total household expenses in the country on the entrance examinations into institutes of higher education consti tuted about 0.9 billion dollars, of which only 560 million were legal21.

Growth of the shadow sector together with the growth of enrol ment of paid students is connected with two main reasons.

- Importance of higher education in contemporary Russian society makes the majority of parents go to rather considerable expenses so that their child enters institution of higher education. High de mand creates both formal (preparatory courses under institutions of higher learning) and informal supply (private teachers, direct bribes paid for entering a university, pull, etc.). Formal and even in formal supply of services somewhat lessen the issue of federal budget shortage, which is necessary for normal performance of in stitutions of higher education (informal service delivery compen sates low pay of university lecturers). Both formal and informal ser vice delivery lead to a reduction in efficient use of resources in the system of higher education. In order to preserve the system of for mal and informal service delivery to enter a university, institutions of http://www.anti corr.ru/awbreport/indextxt.aspfilename=rutxt/03.xml# See Monitoring of the educational system economics. Information bulletin. No.2, 2003.

higher education are forced to constantly increase the gap between the knowledge requirements at the entrance exams and the level of knowledge of school leavers, and thus artificially preserve the situa tion, in which the high school leaver cannot cope with the men tioned requirements. Such knowledge requirements are specific for each institution of higher education. That is why a school leaver must resort to private teachers services formal or informal.

- Clear division into free and paid education creates a stereotype ac cording to which weak but rich students enrol into paid education.

Very often households spent on childrens preparation for university enrolment considerably more than the cost of the whole university course of paid studies. Besides, legal private teachers services do not guarantee that a school leaver who uses such services enters a university and gets free education. In case of an unsuccessful at tempt a household had either bear costs for paid education or re sign himself/herself to the failure, which is not always acceptable because young boys can be drafted into the army. The only way out for low income households can be paid education in various pseudo universities, which make a small charge for education (200300 dollars per year).

All this leads to a considerable deformation of processes, which are connected with competitive entrance into establishments of higher education and supports the demand on the services provided by non competitive establishments of higher education. Introduction of GPEL guarantees that all persons who passed successfully USE a certain amount of public funds and also was aimed at overcoming all the nega tive tendencies. All school leavers who passed USE22 the government pays more or less for getting university education. This situation allows diversifying the use of households means for preparing a child to enter an establishment of higher education and reduce the level of corruption in the higher education system.

Experiment on the implementation of unified state examination (USE) was initiated in 2001 on the territory of several constituent mem USE soon will be compulsory for graduates of secondary vocational education estab lishments and for those persons who want to enter institution of higher education but did not take USE when finished school (for example, persons who finished school before use was introduced and served in the army.) bers of the Russian Federation23. In 65 constituent members of the Rus sian Federation the school leavers took unified state examination in 2004. In 2002 in several institutions of higher learning situated in those regions funding of higher professional education started with the help of government personal education loans24. At present GPEL plan is be ing developed in three regions and in six public institutions of higher education.

1.Original GPEL model and its later amendments According to the original GPEL model all school leavers pass USE at the same time. They take no less than five examinations: two compul sory and three optional. Results of USE are ranged (maximum points, minimal 0) by the following GPEL categories: A+, A, B, C, D, E.

GPEL category A+ is given to 5 per cent of those who passed USE best, A 15 per cent, B 35 per cent, C 20 per cent, D 15 per cent. As to D and E categories school leavers who did not take or did not pass USE, i.e. 25 per cent of the school leavers the state does not take obligation to fund their further education. Later percentage of school leavers who remained without the state financial support was considered unaccept able on social reasons and was lowed down to 1015 per cent. Besides, a category A++ was implemented. This category comprised those who won international or all Russia olympiads and those who got at USE points for one of the subjects (at present control and measure materi als are compiled in such a way that 100 points out of 100 can get only persons out of 1,000). By the introduction of that category a very nar row circle of persons was determined who received a chance to enter any institution of higher education and got considerable financial assis tance from the state. Originally it was thought that categories from A+ through D do not depend on the USE results (number of received points), and is determined as percentage of the overall number of per sons who passed USE.

It was also originally thought that institutions of higher education set themselves tuition in each direction and specialty. Correspondingly See Decree of the Government of the Russian Federation of 16 February 2001 No.On Carrying out of Experiment on Implementation of Unified State Examination.

See Decree of the Government of the Russian Federation of 14 January 2002 No.6 On Carrying out in 20022003 of Experiment To Finance Individual Institutions of Higher Vo cational Education with Implementation of State Personal Education Loans. while entering one and the same institution of higher education those school leavers who received high marks and were granted high GPEL categories had to pay very little or nothing at all and those school leav ers who received low marks and were granted low GPEL categories had to pay more. However, GPEL critics argued that it would considerably reduce the level of free higher professional (secondary vocational) education, which is unacceptable on social grounds. It was decided to preserve the norm of the Law On Education, which stated that the state took an obligation to provide enough funds for education of 50 per cent of the student free of charge. This meant that each institution of higher education accepts no less than 50 per cent of best school leav ers on GPEL basis without charging them at all.

Thus, this plan differed from the existing situation in that the remain ing 50 per cent of the student part receives certain let it be small state funds to pay for their education. As can be seen in Figure 4, as both in the existing and in the future system (tried during 20022004) paid stu dents partly pay for the education of budgetary students.

Financing on GPEL basis Tutuion costs Non-reimbursable Additionally paid by the student 1st Category 2nd Category 4rd Category 3rd Category 5th Category 100% 0% 50% Enrollment, as % Fig. 4. Financing of the institutions of higher education on GPEL basis Rb. Thos As was noted above, in the original GPEL model all students paid in addition for their education: according to USE results some paid in addition less or nothing at all, others paid in addition more or even paid all in case they passed USE badly but everybody paid (paid in ad dition) exclusively for his/her education.

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