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Working paper

University Revenue within a New Structure of Resources

Market reform in Russia has had a positive impact on economic sectors and has generally led to higher production quality. However, the education sector (especially professional training) has been an exception. Although education reform was undertaken with the goal of modernization, the general level of value added in the education sector has not grown in the past four years. This article examines changes in higher education under the new configuration of resources based on the income structure of universities located in the Central Federal District (CFD). The results evidence a change in financial support from different income sources and in cost structures at university level. These are the result of higher education reform and university support programs aimed at enhancing the academic and research capacity of the leading Russian universities and developing a competitive national education system. This paper reveals trends in the financing of higher education institutions using statistical and economic analysis, comparing the income structures of different groups of universities and their cost structures. Analysing the dynamics of the aggregate indicators, we study cost structures considering university priorities to increase teaching staff salaries and income from their research and development projects. The study assesses the implications of increasing regional university differentiation in terms of funding and income sources, which lead, considering the commitment to increase the faculty’s salaries, to a shortage of funds for the maintenance of property. These circumstances force the universities to make considerable efforts to find extrabudgetary funding sources in a situation of shrinking effective demand, which jeopardises the development opportunities for a large proportion of regional universities4 .