financing

Financing higher education in Kyrgyzstan

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For a small country with a population of a little over 6 million, Kyrgyzstan has an awful lot of universities – 68 at last count. For comparison, Singapore (population 5.8m) has exactly half as many and El Salvador (identical population to Kyrgyzstan) has 26 universities.

As with many countries in the former Soviet space, the number of universities and institutes (collectively, higher education institutions, or HEIs) rocketed in Kyrgyzstan with the collapse of the Soviet Union in 1991. Even so, growth in the higher education system in Kyrgyzstan was phenomenally high, increasing by 325% in the first 15 years of independence. In neighbouring Kazakhstan, the increase over the same period was a more modest 197% (!).

Higher education growth in Kyrgyzstan came in both the pre-existing public sector as well as the nascent private higher education scene, and these days, the split between public and private HEIs is more or less 50-50.

With so many universities competing for students and limited state resources, Sputnik Kyrgyzstan recently published a fascinating interview with a senior administrator at one of the country’s leading institutions, Kyrgyz National University (KNU) on how the university gets and spends its money. This level of detail is often very difficult to glean from universities or Ministries of Education, so it adds quite significantly to our understanding of how higher education in a major state university in the former Soviet space is funded.

If cats did university budgets…

Income

KNU is a public university according to its history and current legal status, but in fact only gets 7% of its funding from the state.

As one of the biggest universities in the countries, they have over 17,500 students on their books and it’s these students who basically keep the university propped up. 92% of students are fee-paying, meaning that only a small minority are funded by the state (through various scholarships for e.g. high academic performance in secondary/high school or family/social status).

The biggest source of income by far is the 485 million som a year the university generates from tuition fees – equivalent to US$7m. Not bad considering that tuition fees didn’t exist as recently as 30 years ago.

From the state, KNU receives 40 million som a year (US$600,000) in the form of funding for students in receipt of government scholarships. The university allocates 60-70% of this on salaries and employment taxes.

Other income is minimal in comparison: 12 million som a year (US$170,000) in rent from its four dormitories, and 6 million som (US$85,000) from its residence in Issyk Kul (a popular lakeside holiday destination) and from eight dissertation councils.

In total, KNU is generating 543m som or US$7.85m in income a year.

Tuition fees and student numbers

Fees at KNU range from 31,000 som per year (about US$450) on ‘cheap’ courses such as physics, chemistry and Kyrgyz philology up to 46,000 som (around US$650) for economics courses in the Kyrgyz-European Faculty.

Each faculty has some wriggle room in setting its fees – some are planning to increase theirs by up to 10%, whereas others are actually decreasing them. This has been the case in physics and meteorology, where KNU has struggled to fill both fee paying places as well as state funded spots.

Total student numbers at KNU are considerably higher than at many universities, but have nevertheless dropped quite dramatically. Whereas around 28,000 students were fee paying 3-4 years ago, that number has almost halved to today’s figure of 16,330.

State sponsored places have also been reduced from 2,100 to 1,346. However, the university does not believe that the government will totally withdraw scholarship funding.

Expenses

As a state university, KNU has some limits on how it can spend the tuition fee income. They are required to allocate 80% to salaries and the remaining 20% for local taxes, staff/faculty travel, physical resources (furniture etc) and infrastructure maintenance.

A senior lecturer can expect to receive around 6,000 som a month from the state funding (a paltry US$85), which KNU then supplements depending on the lecturer’s teaching load and level of qualification (PhD/Candidate and Doctor of Science qualifications would entitle to you a higher pay grade).

The university doesn’t say what the total monthly pay packet looks like for senior lecturers, but the average monthly salary in Bishkek, Kyrgyzstan’s capital (where KNU is located), is US$285. Let’s hope that senior lecturers are not too far off that figure.

KNU pays 144 million som (US$2m) to the state in various taxes each year, as well as a whopping 564 million som (US$8m) for electricity, water, and communal and other services.

I can’t calculate the total expenses per year as it’s not clear from the article whether the 20% of fee income in taxes is included in the 144m figure noted in the previous paragraph. And either I’ve misunderstood someting or there’s a typo in the services figure: if it really is 564m som a year, that’s more than the total income and presumably would mean the university would run very quickly into bankruptcy.

Those queries aside, the availability of data like this sheds important new light on higher education financing in Kyrgyzstan. For me, the big takeaway is how little of the university’s funding actually comes from the state despite its appellation as a public university and, as a result, just how dependent KNU is on tuition fee income and therefore students’ continued desire to study at the university.

DIY budgeting: The self-financing experiment in Uzbekistan’s universities begins

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Further to my December 2019 post, An Uzbek experiment, the new do-it-yourself funding model for 10 of the country’s higher education institutions (HEIs) has now come into force. All 10 will be under the watchful eye of the Ministry of Higher and Secondary Specialized Education to ensure that prices don’t jump too high, too fast and that standards don’t slip – and most importantly, as one news agency points out, to prevent corruption slipping in.

If cats could account for themselves…

So, as of January 1, 2020, the HEIs, a mix of universities and specialized institutes, are now able to:

  • Set their own tuition fees
  • Introduce new Bachelor’s and Master’s degrees
  • Continue to receive state funding for some students
  • Decide how their institutional budget will be split

This last point is one of the most important, although not getting as much press attention as the excitement generated by the possibility of new courses / fear that fees will be hiked.

Why? Because until now, all HEIs in Uzbekistan had to conform to the rigid model imposed by the government: 46.8% on salaries, 33.1% on scholarships, 11.5% on budget deductions (i.e. retained by the government) and 8.6% on other expenses. So now, if one of the 10 DIY-HEIs wants to increase faculty salaries, buy more computers or offer more student funding, it can do so.

Next door in Tajikistan, where I have been doing interviews with university-based researchers, this self-financing model and the flexibility it provides to set your own budget is seen as a very positive move for the woefully underpaid academics still committed to the academic cause. In Tajikistan (as in some other former Soviet countries), self-financing is offered to universities that obtain ‘national’ status. So far only one university of 35 in Tajikistan has this, but there are others that are keen to upgrade both for reputational purposes and financial flexibility.

An Uzbek experiment: Self-financing for universities

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Hot on the heels of being awarded The Economist’s ‘Most Improved Nation‘ in 2019 and just ahead of parliamentary elections that may pave the way for future steps towards political openness, the government of Uzbekistan is not resting on its laurels.

Uzbek HEIs demand to be given all the bills

In early December it was announced that ten higher education institutions (HEIs) in Uzbekistan (of a total of 74) will be part of an experimental reform that will see them become self-financing. This is a huge shift from the top-down state-centric way that public HEIs have been funded and governed until now.

The HEIs, listed below, were chosen because of their “high research and teaching potential, financial stability, adequate resource base and high demand for their courses”, according to a post by the Ministry of Justice.

As of January 1, 2020, the HEIs will be allocated “additional tasks” that will enable them to earn income from non-state sources. These include expanding course options, offering professional development courses and introducing other paid services.

This experimental reform is part of a Presidential Decree signed on 11 July 2019 that is called ‘Measures to Introduce New Principles of Governance in the Higher and Technical and Vocational Education System’.

Many new principles, and still no sign of the Uzbek energy for reform flagging…

List of HEIs to shift to self-financing on an experimental basis from 2020:

  1. Samarqand State University of Foreign Languages
  2. Samarqand Institute of Economics and Service
  3. Tashkent State University of Law
  4. Tashkent State University of Economics
  5. Tashkent Institute of Finance
  6. Tashkent State Institute of Oriental Studies
  7. Tashkent Institute of Pharmacy
  8. Uzbek State University of World Languages
  9. Urgench State University
  10. Tashkent Institute of Railway Engineering

Planning ahead in Kazakhstan

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The Ministry of Education in Kazakhstan is about to launch a new savings plan to help parents save towards the cost of their children’s higher education. After an initial deposit, subsequent instalments can be variable both in amount and frequency. On top of the bank’s interest rate, the government has committed to add in 5-7% as a ‘premium’. Both the flexibility of the options for saving and the government premium act as strong incentives to make use of the facility and I imagine it will be popular, particularly amongst a) middle and high earning families and b) families with a history of higher education participation. But in a country where great value is placed on education, perhaps it will also motivate those outside of those two obvious groups to make their contribution towards their family’s future.

I think this is a great initiative and credit is due to the Ministry of Education. It shows a country that is comfortable with (or at least, accepting of) the concept of families contributing towards the cost of higher education and there is a lot that the UK, still licking its wounds from the introduction of GBP£9,000pa fees, could learn from.

Here’s the full story from Tengri News http://en.tengrinews.kz/finance/In-April-2013-Kazakhstan-to-launch-education-savings-plans-17770/ (copyright):

Thursday, 14.03.2013, 13:12
In April 2013 Kazakhstan to launch education savings plans

Zabira Orazaliyeva, Financial Center LLP President. Photo courtesy of rus.azattyq.org
In April 2013 Kazakhstan will launch education savings plans, Ms. Zabira Orazaliyeva, Financial Center LLP President, said at a press-conference at the country’s Education Ministry March 14.“Any citizen of Kazakhstan can open a savings account with an eligible bank to accumulate funds to cover his or her children’s tuition fees in future”, Ms. Orazaliyeva said.

According to her, the major distinguishing feature of the state-run education savings plans is that the state offers a premium making up 5-7% of the amount [depending on the social status of the depositors] in addition to the bank’s interest on the deposited amount.

“Halyk Bank, Kazkommertsbank and Temir bank are among the first banks to participate in the state-run program. A number of other major banks also meet the standards to participating banks”, she added.

All the data on the participating banks will be available at the Financial Center LLP’S website.

Tengrinews.kz reported mid-January that Kazakhstan’s President had enacted law on the state-supported education deposits to be introduced as a tool to help families accumulate funds to cover their children’s tuition fees.

According to the law, depositing a certain amount in the name of their child, parents enjoy both the bank’s interest and a special premium from the government.

The minimum obligatory amount to be deposited in 2013 shall be 4854 tenge ($32). The amount of all the following installments and frequency thereof shall be at the discretion of depositors. The premium offered by the government shall make 5%, with the figure standing at 7% for some categories of population.

When presenting the draft legislation in the country’s Parliament, the Education Minister cited an example of how the scheme will work: “”Let’s assume a family open a deposit in the name of their 10-year-old child. The first deposited amount makes up 5000 tenge ($33), with all the following monthly deposits standing at 15 000 tenge ($100). By the time the child turns 17, the amount of the deposit will make up 2 075 000 tenge ($13 800), with 60% of the amount being the depositors’ money, 23% provided by the bank as an interest on the deposit and the other 17% provided by the government as a premium”.