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RUSSIAN ECONOMY IN trends and outlooks Sothern, Urals and Far Eastern okrugs. Simultaneously, sociological surveys demonstrated that in 2005-2008 secondary vocational education was increasingly growing into a transit level of vocational training: the vast majority of its graduates aspired to enter the higher educational institutions. For example, out of 76% of graduates from SVE institutions who would like to continue education, with 91% of them, or nearly 70% of the overall number of school leavers were opting for university degree.

Higher Vocational Education In 2000/012007/08 academic years the system of higher vocational education was growing rapidly both in number of institutions (state and non-state) and in the number of students (Table 9) Table Higher Educational Institutions (as of the beginning of the school year) Of which studied at departments Number of stuNumber of institu- Number of students Daytime-by correYears dents total, thouBy corre- External tions per 10,000 persons daytime spondence sands spondence studies (evening) All Higher Educational Institutions 2000/01 965 4741.4 2625.2 302.2 1761.8 52.2 2002/03 1039 5947.5 3104.0 346.0 2399.9 97.6 2003/04 1044 6455.7 3276.6 351.3 2703.7 124.1 2004/05 1071 6884.2 3433.5 361.8 2942.5 146.4 2005/06 1068 7064.6 3508.0 371.2 3032.0 153.4 2006/07 1090 7309.8 3582.1 372.3 3195.9 159.6 2007/08 1108 7461.3 3571. 352.9 3367.9 169.2 State and Municipal Higher Educational Institutions 2000/01 607 4270.8 2441.9 258.6 1518.8 51.5 2002/03 655 5228.7 2861.6 298.8 1973.4 94.9 2003/04 652 5596.2 3009.9 301.8 2164.9 119.6 2004/05 662 5860.1 3143.6 300.3 2279.4 136.8 2005/06 655 5985.3 3195.2 299.9 2348.3 141.9 2006/07 660 6133.1 3251.2 291.3 2443.2 147.4 2007/08 658 6208.4 3240.7 280.4 2532.4 154.8 Non-state Higher Educational Institutions 2000/01 358 470.6 183.3 43.6 243.0 0.7 2002/03 384 718.8 242.4 47.2 426.5 2.7 2003/04 392 859.5 266.7 49.5 538.8 4.5 2004/05 409 1024.1 289.9 61.5 663.1 9.6 2005/06 413 1079.3 312.8 71.3 683.7 11.5 2006/07 430 1176.8 330.9 81.0 752.7 12.2 2007/08 450 1252.9 330.6 72.4 835.5 14.4 Source: the Rosstat.

In 2008 enrollment in the state and municipal higher educational institutions decreased by 21.3 thousand persons (by 1.5%) mainly at the expense of students who entered the daytime form of education. The number of entrants at the correspondence departments went up by 29.thousand persons or by 5.1%.

Distribution of 2008 enrollment in budgetary and paid places is presented in (Fig. 4).

Section Social Sphere Source: the Rosstat.

Fig. 4. 2008 Enrollment in State and Municipal Educational Institutions of Secondary Vocational Education at Budgetary Places with Complete compensation of Costs, thousand It should be noted that starting with 2000 enrollment in higher educational institutions consistently exceeded the number of secondary school leavers (Fig. 5).

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Number of school leavers Enrollment in higher educational institutions Source: the Rosstat.

Fig. 5. Enrollment in Higher Educational Institutions and the Number of Secondary School Leavers, thousand.

RUSSIAN ECONOMY IN trends and outlooks By the number of students per 10,000 of population which constitutes 525 individuals, Russia has taken second place in the world behind the USA. However, if we take into consideration the students of secondary vocational education, in that case Russia will be an absolute world leader by having 695 students per 10,000 of population.

In 2006/2007 academic year the share of students studied on a paid basis in the overall number of students in state and non-government higher educational institutions reached 66%.

Thus, at present over 2/3 of the students of the Russian Federation study on a paid basis.

Recent data has exposed a one more important change taking place regarding admission in higher educational institutions: enrollment in daytime form of education is plummeting (Table 10).

Table Dynamics of Enrollment in Daytime Form of Education in Higher Educational Institutions in 2000 Enrollment, thousand Total Of which daytime education 2000/01 1 292.5 687.2001/02 1 461.6 745.2002/03 1 503.9 774.2003/04 1 643.4 803.2004/05 1 659.1 841.2005/06 1 640.48 830.2006/07 1657.6 826.2007/08 1681.6 789.Source: the Federal Agency of Education As it follows from Table 10, under constant growth of general enrollment numbers, enrollment in the daytime form of education was increasing only till 2004/05 academic year, and then started to fall. At the same time, if in 2005/06 academic year this reduction constituted only 1.3% in contrast from a year before, then in 2007/08 academic year it already constituted 4.5%. Thus, this trend tends to accelerate. Students opt for entering in the correspondence form of education.

It should be noted that this trend is mostly pronounced in the state and municipal higher educational institutions (Table 11).

Table Dynamics of Enrollment in the Daytime Form of Education in State and Non-state Higher Educational Institutions in 2000Enrollment, thousand Overall Of which daytime form of education In state In non-state In state In non-state 2000/01 1 140.3 152.2 621.9 65.2001/02 1 263.4 198.2 669.3 76.2002/03 1 299.9 204.0 698.3 76.2003/04 1 411.7 231.7 724.8 79.2004/05 1 384.5 274.6 758.2 83.2005/06 1 372.46 268.02 746.38 84.2006/07 1376.7 208.9 740.4 85.2007/08 1384.0 297.6 715.2 83.Source: The Federal Agency of Education.

Section Social Sphere Increased enrollment in correspondence form of education is connected both with the shortage of educational amenities and teaching personnel (their involvement is not so intense in case of correspondence form of education) and the growing cost of tuition which was recently increasing due to the growth of the budget expenses per a government subsidized student (at the correspondence form of education budgetary expenses are considerably lower; that is why, the cost of education for paid students is also significantly lower which allows students from lowincome households to get a higher education, at the same time, obtaining not only a state diploma but also a diploma from a prestigious university).

General trend for enrollment in the full-time form of education in the state higher educational institutions reflects a general trend of enrollment in full-time form of education (Table 10). Prior to 2004/05 academic year there was growth of enrollment in the full-time form of education. Then the trend made a U-turn and there was a steeples slump. In 2007/2008 academic year decrease in the enrollment in the full-time form of education constituted 3.4% in comparison with the previous year. In the non-state higher educational institutions enrollment in the full-time form of education comes to far less than half: in 2006/07 academic year it fell down to 28.0% (in state higher educational institutions, on the contrary, enrollment in the fulltime form of education during the period under review was over fifty percent). This trend is explained by the fact that non-state higher educational institutions have recently been focused to the implementation of inexpensive higher vocational education programs on so called soft specialties. Additional gains are achieved due to additional enrollment in the extra-mural form of education. Moreover, those who pay for their own education study in the non-state higher educational institutions. In state higher educational institutions the full-time form of education dominates due to public contract. Increase in budget expenditure on higher education results in the fact that full-time budgetary students become more profitable for the higher educational institutions.

Along with BVE and SVE, the higher vocational education right up to 2009 posted decrease in the share of unemployed graduates from the full-time form of education in the state and municipal higher educational institutions. However, in two Federal Okrugs, Sothern and Far-Eastern, the trend was opposite even prior to the onset of the global crisis. In the Far East, one should specially single out Jewish autonomous oblast and Sakhalin oblast where in this indicator posted correspondingly 27.9% and 28%.

In North Caucasus Federal Okrug the following Subjects North-Ossetia Alania, the Chechen Republic and the Republic of Karachaevo-Cherkessia (however, present indicator is several times lower), as well as the Stavropol Krai where in 2008 over 20% of the graduates of the full-time form of education in state and municipal higher educational institutions were unemployed.

In the last few years a lot has been said about the need to increase the quality of the higher education. High demand for higher education graduates demonstrated by the labor market (on obtained specialization) is considered as one of the most important indicators of improvement of the situation. At the same time, growth of extra-mural education testifies to the fact that notwithstanding the need to improve the quality of higher education the real developments in this field are meanwhile unfolding in the opposite direction.

RUSSIAN ECONOMY IN trends and outlooks Financing of Education In 20002009, both the public and private sources have been increasing their spending on education. From 2000 through 2003 the share of budgetary expenses on education in GDP significantly increased and then it started stabilizing under the growth of absolute volumes (Table 12). Private expenses of education are reflected in Russian statistics as the Volume of paid services for education taking into account hidden and informal activities. Dynamics of paid services volume in the educational system post sustainable growth, in which connection its rates are overtaking the rates of growth of budgetary expenses on education (Table 13).

Table Budgetary Allocations on Education in 2000 2000 2001 2002 2003 2004 2005 2006 2007 2008 Consolidated budget on 214.8 277.8 408.0 475.6 593.2 80.8 1033.3 1342.3 1664.2 1 691.education, bn. Rb.

Federal budget 38.1 54.5 81.7 99.8 121.6 162.1 201.6 278.5 354.9 413.Territorial budgets 176.7 223.3 326.3 375.8 471.6 628.6 831.7 1063.8 1309.3 1278.Share of expenditure on 2.9 3.1 3.8 3.6 3.5 3.7 3.9 4.1 4.1 4.education in consolidated budget, in % of GDP Federal budget 0.5 0.6 0.8 0.8 0.7 0.8 0.8 0.8 0.8 1.Territorial budgets 2.4 2.5 3.0 2.8 2.8 2.9 3.1 3.3 3.3 3.Share of expenditure on 9.7 9.7 10.2 12.0 12.7 11.8 12.3 11.9 11.8 10.education in the RF consolidated budget, in % Share of expenditure on 1.7 1.9 2.0 2.5 2,6 2.4 2.4 2.5 2.5 2.education of the Federal budget in the RF consolidated budget expenditure, in % Share of expenditure on 8.0 7.8 8.2 9.5 10.1 9.4 9.9 9.4 9.3 7.education of territorial budgets in the RF consolidated budget expenditure, in % Source: the Rosstat, the Federal treasury.

Table Volume of Paid Services in the Field of Education in 2000 2000 2001 2002 2003 2004 2005 2006 2007 Volume of paid services in the system of 41.5 56 72.9 95.4 118.7 147 189.6 231.7 281.education, bl Rb.

In % of GDP 0.6 0.6 0.7 0.7 0.7 0.7 0.7 0.7 0.Source: the Rosstat.

Dynamics of paid services in the field of education is represented in Fig. 6.

Section Social Sphere Source: the Rosstat.

Fig. 6. Dynamics of Paid Services in the Field of Education in 2000In 2009 was a turning point in this trend. As can be seen from Table 12, the share of education in the consolidated budget decreased from 4.1% to 4.0% of GDP, at the same time, the share of education in the federal budget went up from 0.8 to 1.0% of GDP, and the share of education in territorial budgets (consolidated budgets of the subjects of the Russian Federation) on the contrary, went down from 3.3% to 3.0%.

The share of expenditure on education in the territorial budgets in the expenditure of the RF consolidated budget has marked a return to the 2001 level, and the aggregate share of expenditure on education in expenditure of the RF consolidated budget has marked a return to the 2002 level.

Breakdown of budgetary expenses according to the levels of education in 20042009 is reflected in Table 14.

Table Volume and Structure of Allocations of the Consolidated Budget According to the Levels of Education 20042009 (esti 2004 2005 2006 2007 mate) Consolidated budget expenditure on edu- 593.4 801.8 1036.4 1342.3 1664.2 1691.cation, Rb. bn Preschool education (PE), Rb. bn 91.7 113 145.3 189.7 254.5 260.Share of expenditure on PE in the con- 15.5 14.1 14.0 14.1 15.3 15.solidated budget, in % General education (GE), Rb. bn 298.1 356 475.9 599 737.1 746.Share of expenditure on GE in the con- 50.2 44.4 45.9 44.6 44.3 44.solidated budget, in % Basic vocational education (BVE), Rb. bn 35.6 39.4 47.4 57.6 65.5 64. RUSSIAN ECONOMY IN trends and outlooks 2009 (esti 2004 2005 2006 2007 mate) Share of expenditure on BVE in the con- 6.0 4.9 4.6 4.3 3.9 3.solidated budget, in % Secondary vocational education (SVE), 30.5 43.3 55.3 70.4 93.9 93.bn Rb.

Share of expenditure on education in the 5.1 5.4 5.3 5.2 5.6 5.consolidated budget, in % Higher and post-higher education, bn Rb. 76.9 125.9 169.9 240.2 294.6 328.Share of expenditure on higher vocational 13.0 15.7 16.4 17.9 17.7 19.education in the consolidated budget, in % Source: the Federal treasury.

As can be seen from Table 14, in 2004-2009 the share on expenditures on preschool, general education and secondary vocational education were rather stable in the consolidated budget on education. The share of expenditure on basic vocational education was decreasing during the entire period in spite of declared aim at developing basic vocational education system. Particularly sharply this share went down following the transfer of the basic educational institutions under the jurisdiction of the Subjects of the Russian Federation (in 2005 4.9% in comparison with 6% in 2004). In 2009 the share of budgetary expenditures on basic vocational education in the consolidated budget expenditure continued going down coming to 3.8%.

Regarding the share of expenditure on higher education then it grew noticeably during 2004-2007 from 13.0 to 17.9%. In 2008 it somewhat went down to 17.7%, and in 2009 according to preliminary estimate surged upwards to 19.4%.

On the whole, the regional and local budgets are financing general education. Dynamics of these expenses, as well as expenses per a pupil in presented in Table 15.

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