PROBLEMATIC ASPECTS OF FINANCING HIGHER EDUCATION INSTITUTIONS: FORMULAIC DISTRIBUTION

Abstract

Financing of higher education institutions (HEIs) is one of the most acute problems of education policy. The introduction of a formulaic approach to the distribution of state funding was aimed at creating an incentive system where more efficient institutions receive more funding. The author defines the main conceptual foundations of this approach, which provides for the distribution of budget funds between institutions on the basis of a comprehensive performance indicator, including the estimated number of students, the scale of educational and scientific activity, the level of international recognition, regional support and employment of graduates. The analysis proves that the current version of the funding formula does not fully implement the incentive function that should contribute to the efficiency of higher education institutions and the development of the higher education system as a whole. Particular attention is paid to the impact of the number of students enrolled under the state order on the formation of indicators and the amount of funding, as the component that has the greatest weighting on the results of the formulaic distribution of funds. The study used economic and mathematical modeling tools. This allowed us to identify the low level of the incentive function of the current formulaic allocation of funds. The results of the correlation analysis revealed a weak connection between the scale of the HEI's activities, which is determined by the number of students enrolled in state-funded education, and the performance of such HEIs. This indicates that the amount of state funding, which largely depends on the number of students, is not always an indicator of the quality of the educational process or the level of competitiveness of graduates in the labor market. It is established that the current system of budget allocation mainly contributes to maintaining the stable operation of universities, but does not stimulate them to develop qualitatively, modernize technologically and increase international competitiveness. The author proves the need to improve the indicators, methods of their formation, balancing of weighting coefficients, development of mechanisms for adapting funding to the real needs of the labor market and society.