7
Consequently to the shock therapy reform and the industrial recession of the early and mid
nineties the state budget expenditures on education were cut down significantly, both in nominal
and relative terms. For more than ten years the needs of the secondary school and tertiary
education institutions have been underfinanced by more than two thirds, with the expected result
of uncompetitive salaries for the teachers, depreciation of the equipment, obsolete character of
the teaching materials. In 2000 the rational budget of educational institutions (calculated by the
Ministry of Economy and Ministry of Education as the sum of minimal competitive salary equal
to the average in the industry sectors, to prevent the drain of the staff from schools and twice the
amount for tertiary education institutions, plus overheads, current and capital expenses) was
covered by less than one third of the norm. At the same time the demand for the education,
especially higher education services, continued to grow.
The consequences of under financing; the relative withdrawal of the Government from the
system, and, in view of absence of independent quality control institutions, often inadequate
quality of education; lack of reliable information on the quality of education; on the current and
forecasted labor market needs resulted in distortions in the educational services market, diversion
of substantial amounts of funding into shadow flows and low quality of education of millions of
university graduates. More than 3 million of economists, managers and lawyers graduated from
more than 600 universities over the nineties. The received education inadequate quality results in
their unemployability and subsequent need for further education. The system regenerates itself.
Not considering either the societal consequences of the above or the human waste here, we will
focus on further financial losses for the education system itself. The households of both average
and low income co-finance the education of their children in secondary schools at the level of
about $200-400 and $100-120 a year respectively. The expenses born by the average income
family for access of their children to tertiary education amount to $800 - 1500 a year, the
amounts often do not flow into the educational institutions, but are paid for individual tuition of
children to the teachers of the respective institutions. The practice is justified by the currently
radically individualized and diversified tertiary education institutions entrance exam
requirements. But the amounts are foregone for the formal education system.
The low income families not able to afford spending more than $250-400 for preparation of their
children to tertiary education, have to accept the low priced and low quality programs of for
profit higher education institutions, thus leakage of funding diverted from effective institutions
amounts to almost one billion of USD. The total loss resulting from the above described
diversion of financing, the low quality of graduates and their unemployability is estimated at $3
- 3,5 billion.
The Modernization strategy aims to establish a system ensuring effective operation and use of
resources, independent quality monitoring and control and efficient information flow to the
learners. The Government must guarantee 1)adequate and free of charge information to the
education institutions and control of the trustworthiness of the information; 2) independent and
public control of the education quality, validation of the education programs, unified national
tests at the secondary to tertiary education threshold; 3) subsidization of education. The two
mechanisms presented further target to enhance the choices of the learners, increase
effectiveness of the expenditures and promote equity. The proposed schemes operate in
conjunction.
The Unified National Test is an instrument of the school leavers' knowledge assessment
administered at their graduation from secondary education and an external quality control tool of
the secondary schools education. The UNT results are used for application and enrollment into
the tertiary education institutions. More important, the Government Individual Financial
