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The Newsletter About Reforming Economies
The World Bank
January/February/March 2003
Reforming Russia’s Education System
By Abdur Chowdhury and Inna Verbina

Abdur Chowdhury is a senior researcher at BOFIT and Inna Verbina is a research associate at WIDER. This article was published in the February 2003 issue of the Russian Economy—The Month in Review.

The Russian Federation inherited a fairly well-developed, mature education system from the former Soviet Union. Most school-age children had access to general education and literacy was almost universal. Transition, however, exposed weaknesses in this system tailored to the needs of a centrally planned economy. Specifically, it had limited abilities to respond to the changing economic structures of a market economy.

With a view to enhancing efficiency and accountability, much of the education sector was decentralized under the 1992 Education Act. Under this law, responsibility for general education and school finance was entrusted to regional (oblast) and local (rayon) authorities. This rapid decentralization attempt proved to be poorly designed: it lacked the commensurate transfer of resources and never spelled out the extent of government responsibility.

State of Education

Reform attempts since 1992 have encountered the following three major obstacles:

• Financial transfers from the federal to regional governments have decreased, both in absolute and relative terms and relative to what the regions themselves spend.

• Many regions with ethnic minorities sought to establish their own education systems and launch their own education reforms, creating dissonance between key elements of the federal and regional approaches.

• Teachers’ and educators’ real incomes have declined, and as a result many qualified managerial and teaching staff have left schools for better paying jobs elsewhere.

There is genuine concern that the emphasis on educational decentralization and diversity is creating greater inequities and contributing to a narrowing of educational choices and opportunities. Today the education system faces an increase in social stratification, a differentiation among educational institutions, and the emergence of a system of paid education services. All these developments are making education less accessible to low-income citizens. Of the country’s 89 regions, 16 now spend at least a third more per student on compulsory education than the 18 regions at the bottom of the spending scale.

The federal government has recently adopted programs that provide for a set of measures to modernize educational institutions and improve the quality and efficiency of education. The program provides for a transition to a 12-year program of education, the introduction of a single state examination, and the inclusion of more technical subjects in the basic high school curriculum. The government also plans to shift the responsibility for financing teachers’ salaries from the municipal level to the regional level, while local budgets will still be responsible for maintaining the infrastructure of educational institutions. The 2002 consolidated budget saw a 60 percent increase in the allocation for education compared with the previous year.

Unfinished Agenda

While these are steps in the right direction, much more needs to be done. Specific reform options worth consideration include improving efficiency by giving schools increased financial autonomy, implementing a per capita financing formula, and raising teachers’ qualifications. The government must also ensure that schools are geographically accessible, affordable, and equipped with educational resources that meet minimum standards. Furthermore, schools need to deliver a curriculum that does not handicap students’ access to higher education. This process could be promoted by a fair, affordable, and enforceable mechanism of compensatory finance between and within regions based on the inter-regional equalization mechanism introduced in the mid-1990s.

Schools have to find innovative ways to attract private money to supplement public outlays. While a huge shadow market for educational services exists equivalent to about 1.5 percent of GDP, public schools are unable to tap into this market because of their rigid policies. Indeed, money parents give to school officials for various projects is seldom properly accounted for. Transparency of income flows and efficiency in spending are essential for an education system to flourish. Schools could also raise funds from private sources to finance targeted, well-designed programs. Various means for attracting business funding for vocational and higher education could also be explored. Moreover, the government should ensure that students in all regions enroll in a minimum number of core courses to assure a common basis for educational assessment. In addition, civil society could be more involved in planning a merit-based education system that rewards superior academic achievements.

Because spending on primary education is considered as a means for improving general welfare and reducing inequality, any strategic plan should stress the distributional aspect, that is, money should first and foremost be allocated to providing every child with a sound education. Finally, in place of the current state financing of educational infrastructure, Russian education needs a targeted approach that rewards schools for providing a high-quality education. In places where parents can choose among several schools, the attractiveness of individual schools will depend on what they offer students. An education system based on accessibility, quality, and merit is essential to ensure that Russia has the high-quality human capital necessary for sustaining economic growth.

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