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Underlying this decision was constant and growing ware arrears to teachers and teachers strikes. The decision was legitimized by Federal Act No. 123 FZ of July 7, 2003, On introducing amendments to individual legislative acts of the Rus sian Federation in the part concerning institutions of general education, and since 2004 some regional budgets have begun an experiment by allocating subventions to local budgets for the sake of implementation of the educational process38. In 2005, the transition towards this system started in most Subjects of the Federation.

That helped improve the situation with financing in the sector as a whole, albeit wage arrears still exist there. The process continued in 2006.

Meanwhile, the allocation of subventions on education to municipalities from regional budgets raised the problem of principles underlying distribution of the re spective funds and de facto fueled the transition towards the standardized per capita principle of financing of the general education. The subventions began being calculated proceeding from the number of students in a given municipality, i.e. ac cording to the per capita principle. But that exposed a problem namely, while re gions allocate subventions basing on the per capita principle, local administrations, as a rule, distribute the funds between schools to cope with different challenges, such as preservation of the schools network and their cadres, among others. Note that because of demographic reasons, the contraction in the number of students leads to an annual contraction in the number of schools and teachers roughly at 1 2%. The process would be far more intense, were the funds be allocated in a strict adherence to the standards.

Thus, it is possible to draw a conclusion that while the regional level of man agement of the educational system has begun to rest its operations upon the net work optimization principles, the municipal level pursues the task of social stability, rather than increase in economic efficiency of the use of resources in the general education area.

The year 2006 saw the launch of an experiment on testing the mechanism of standardized financing of the SVE institutions. The experiment will be conducted for three years (2006 2008). In 2006, there existed only the legal basis of its con In addition to the three Subjects of RF that had earlier launched the experiment (Samara and Vo ronezh oblasts and the Republic of Chuvashia). Beyond the experiment framework and practically simultaneously with Voronezh oblast and the Republic of Chuvashia the practice of the standardized per capita financing was launched by Yaroslavl oblast.

Section Social Sphere duct, but the Statute on conditions of its conduct makes it evident that its results are going to be fairly limited, for the experiment centers exclusively on the system of budgetary financing of SVE institutions.

4. National project Education. In 2006, the national educational system has entered the period of intense activities associated with the implementation of the priority national project Education. Let us consider main outputs by individual avenues of promotion and support of the educational sphere approved by the Pre sidium of the Council on implementation of the priority national projects under the RF President (protocol No.2 of December 21, 2005).

So far as the avenue entitled Support and promotion of the best models of the national education is concerned, its main blocs of measures provided for en couragement of universities and institutions of general education that vigorously introduce innovational educational programs; provision of support to talented youth; rewarding the best teachers.

In compliance with RF Government Resolution No. 89 of February 14, 2006, last year, it was planned to allocate from the federal budget as much as RUR 8 bn.

for support to 10 universities and 3,000 schools. In 2007, the respective amount will be increased up to RUR 18 bn., to be distributed between the universities that won the 2006 competition and another 20 universities, and 3,000 schools.

On May 19, 2006, results of the competition for support of innovational uni versities were announced. The victors became 17 universities, which became enti tled for a RUR 5 bn worth support from the federal budget. The selection was based on the following criteria:

- a high quality and effectiveness of their innovational educational programs;

- the implementation of such programs should lead to qualitative changes in the level of education, R&D works, and efficacy of their introduction;

- resources employed for implementation of such programs should match the scale of the declared objectives;

- the planned output should be justified and stable.

As well, the selection committee took into account efficiency of the organiza tional and financial support of the program by a universitys external partners and envisaged effects in the economic, social and scientific areas. The funds allocated to the victors were designated for targeted spending on innovational educational programs, including retraining and upgrading of tutors qualification; purchases of experimental equipment, software, and modernization of the university facilities39.

As noted above, after winning the 2006 national competition, as many as 3,000 institutions of general education received the government support. The vic tors became institutions that vigorously introduced innovational educational pro grams, and they were represented both by advanced educational institutions of general education (lyceums and gymnasiums)and regular schools (a. 50% of the total number of the victors). The respective funds (RUR 3 bn) were allocated from the federal budget to regional ones in the form of subsidies. The financial support The formation of the network of innovational educational programs is considered in a greater detail in Section 4.5 of the 2006 IET annual issue.

RUSSIAN ECONOMY IN trends and outlooks was a targeted one and it was designated for purchases of laboratory equipment, software and methodological literature, modernization of the material and technical and educational base, retraining and upgrading of qualification of the staff of the institutions in question.

To award the best schoolteachers for their outstanding performance and sig nificant contribution to education, the government ruled to allocate annually RUR bn. to award 10,000 such teachers with a RUR 100,000 bonus payable to each of them.

In 2006, the government ruled to award 1,250 young (aged between 14 and 25) winners in the nationwide and international scientific competitions with individ ual RUR 60,000 worth bonuses. Another 4,000 young prize winners in the national, as well as regional and inter regional competitions received a RUR 30,000 worth bonus each The avenue entitled Introduction of modern educational technologies pro vided for granting access to the Internet to at least 1,800 educational institutions in 2006, and the mission had been completed by December 2006. As of December 14, 2006, as many as 2,980 communication channels were established, thus mak ing it possible for educational institutions to be Internet connected in 2007. It is envisaged to have another 34,940 schools Internet connected and have an unlim ited access to WWW by the end of 2007. The ultimate goal of this project is get all the schools connected to the Internet, while a more specific goal is to secure a normal bilateral access to educational resources, including the Federal Center for Informational Educational Resources.

In 2006, Russian schools received educational equipment worth a total of RUR 2.3 bn. Given that regions have co financed the project, the number of such schools should be no less than 8,000. The funds will be allocated in proportion to the number of students in urban and rural localities in a given region, with the quota doubled for rural schools. As well, it may well happen that the equipment will be supplied first to the schools that participated in the aforementioned competition of innovational schools and those that failed to win it, but matched the criteria of par ticipation in that.

The avenue entitled Creation of the world class national universities and business schools suggests establishment by 2008 two university centers and two business schools in Russia.

Pursuant to Federal Governments Resolution of November 4, 2006 No. 1518 p and the one of November 23, 2006, No. 1616 p, to ensure training of highly quali fied specialists and boosting up competitiveness of the locomotive sectors of local economies in the Siberian and Southern federal okrugs, the respective rulings im plied establishment of two new federal public institutions of general education (FPIGE) HPE The Siberian federal university and The Southern federal univer sity. The former institution is established by amalgamating, on the basis of Kras noyarsk state university, three other ones, namely, Krasnoyarsk state architectural and construction academy, Krasnoyarsk technical university and the State univer sity of non ferrous metals and gold. Likewise, the Southern federal university is Section Social Sphere established by means of amalgamation on the basis of Rostov state university of Rostov state academy of architecture and fine arts, the local state pedagogical uni versity and Taganrog state radiotechnical university.

With their 30,000 students and faculty outnumbering 8,000, the new universi ties will focus primarily on training cadres for large innovational projects and those who will form the army of researchers capable to develop modern technologies on the basis of research centers that will be formed under the universities. That should allow students mastering skills and ensure an efficient combination of education and research and practical activities.

In early 2007, the Government should be in receipt of proposals on the future development of the noted universities, including modernization of their educational and research processes, solidification of the material and technical bases, capital construction and improvement of the labor compensations systems, and recom mendations on their integration into operations of the network research organiza tions under the Russian Academy of Sciences situated in the territories of the re spective federal okrugs40.

As a follow up to the initiative by the RF Ministry for Economic Development and Trade and FPIGE HPE Saint Petersburg state university, the RF Government has ruled to establish on the basis of the universitys Department of Management a special structural subdivision, that is, business school the Higher School of Man agement (Resolution No. 576 p). Last year, as much as RUR 350 m has already been allocated for this purpose.

The avenue entitled Improvement of the level of pedagogical work at schools suggested additional monthly compensations payable to schoolteachers.

Since January 2006 at least 900,000 Russian teachers have begun receiving addi tional monthly compensations for out of school activities. The basic rate of the compensation is RUR 1,000 for a standard group of students, and it varies in pro portion with their actual number. The basic standard group for urban schools (students) differs from that for rural ones (14). The 2006 federal budget eramarked RUR 7.7 bn for this project.

So far as the avenue entitled Development of the system of vocational train ing in the army is concerned, the national Defense Ministry, together with the RF Ministry of Education and Science proposed to launch an experiment on extending opportunities for conscripts to receive a primary vocational training. The initiative was approved and the experiment started on January 1, 2006, on the basis of spe cial military training camps. The project will be funded from the resources the De fense Ministry allocates in the subsection Primary vocational training under the section Education in the 2006 federal budget.

While in 2006 there appeared 25 pioneer military training centers, in the first half of 2007 there should be established yet another 75 ones. A voluntary enrollee will be able to earn a standard state diploma in primary vocational training by spe cialties the list of which the Defense Ministry should work out with account to actual On the innovational universities established in the framework of the national project Education, for details see Section 4.5 of the 2006 IET annual issue.

RUSSIAN ECONOMY IN trends and outlooks capacity of military units, the length of a given course, and job opportunities in spe cific territories.

It should be noted that developed in 2006 proposals on development of this particular avenue of the national project were consequently reflected in Federal Act of January 6, 2007, No. 1 FZ On amending individual legislative acts of the Rus sian Federation on matters of accessibility of the secondary vocational training and the high professional education to the military personnel (citizens) that carry ( ied) military service under contract. The amendments introduced to Federal Act On education (of January 13, 1996, No. 12 FZ) and On the high and post university professional education (of August 22, 1996, No. 125 FZ) suggest that military personnel (except officers) that carry out the military service under contract and the permanent duration of the military service under contract of whom is no less than three years, providing a successful passing of entrance examinations, enjoy, following procedures set by the RF Government, the right of the hors concours admission to the state and municipal educational institutions of the secondary and high professional education, as well as preparatory departments of the federal public educational institutions of the high professional education. Tuition provided to these categories [of the military personnel] is paid for out of the budgetary sources by the internal and by correspondence form of training or by correspon dence form of training.

Plus, the citizens that have carried, no less than for three years, military ser vice under contract in the Armed Forces of RF, also enjoy the right of the hors con cours admission to the HPE institutions in the event they have successfully passed entrance examinations. In the event, upon a duly expiration of their contract with the Ministry of Defense, they for the first time have enrolled for a university preparatory department, the costs of their tuition is covered by the federal budget.

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