The State Policy of Funding Higher Education Under Public Budget Constraints1

Abstract

This article describes the changing face of institutions of higher education in Russia in comparison with other countries. It is shown that the ratios of funding sources for higher education in Russia are similar in structure to those in other countries. However, the absolute amounts of funding from these sources are three times less in Russia than the level of the OECD countries. We analyze the following two strategies that Russian universities have used to cope with reduced public funding: diversification of sources of income and changing the structure of expenses. These strategies have been borrowed from the experience of foreign universities that have reformed their financial management. We identify the following main trends in the financing of Russian higher education: concentration of support on leading universities, reliance on public support for higher education as a main source of funding, and the weak use of public-private partnership mechanisms as well as endowment funds. We provide an assessment of the impact of these trends on the economic position of universities.