The Pitfalls of Differentiation in the Financing of Russian Universities

Abstract

Study objective: To identify the causes and consequences of the growing stratification of universities in terms of the volumes and sources of funding that they have access to as well as in the programs of study that they offer.Methods: We used statistical and economic analysis to study the outcomes of university activity. We assessed the interrelationships between the resource base of higher education and the production and economic potential of the Russian regions through the application of an econometric model. We also conducted an empirical analysis of the factors that are influencing the increasing public demand for higher education.Results: We identified trends in how the demand for higher education has structurally changed between 2001 and 2014. We assessed how sources of funding at universities differ from region to region given the transition to the performance-based contract model. We identified the main risks (pitfalls) associated with the structural misalignment of the demand for higher education and the proposed quotas for public scholarship-funded seats in various fields of study. This process is unfolding against a background of increasing regional differentiation, which is contributing to the stratification of Russian universities in terms of the volumes and sources of their financial support and heightened financial obligations caused by raising the salaries of faculty members and leading to a shortage of funds that are available for facilities maintenance as well as supporting the learning process. This latter factor jeopardizes the quality of educational programs.Findings: We were able to identify trends in how the demand for higher education is structurally changing in Russian higher education on the basis of an empirical analysis that was carried out using an econometric model. We assessed the impact of the global economic crisis and the effective ability of families to pay for higher education. We also identified the risks (pitfalls) that result from the regional differences in university funding.Practical significance: Specialists may apply the main arguments and conclusions of the article in the field of economics and management when drafting university financial plans and development strategies.