CURRENT POLICY ISSUES ON EDUCATION

1.1. Background
1.2. Goals and Objectives of Privatisation and Restructuring
1.3. Scope, Timeframe and Participants
1.4. Primary Principles of the Programme
1.5. Public Policy for Financing
1.6. Support for Learners
1.7. General Policy for Service Fees

2.1. Restructuring of Education, Culture and Science Sectors
2.2. Management Contract
2.3. Delivery of Services through Performance Contract
2.4. Investment through Tendering
2.5. Privatisation through Loan Contract

3.1. Risk Management during the Process of Privatisation and Restructuring
3.2. Programme-Supportive Activities
3.3. Preparatory Work for the Implementation of the Programme

CHAPTER ONE. GENERAL PROVISIONS

1.1.        Background

As a result of continuous Government policy for education, about one fourth of the population of Mongolia is currently attending educational institution. Mongolia has achieved an adult literacy rate of 97,8% a situation comparable to developing countries.

As Mongolia embraced the market economy in 1990, education, science and culture have experienced extreme budget constraints and capital deficiencies, which in its turn have had negative impacts in the normal delivery of educational and cultural services. A similar situation has occurred in sciences and allocation of resource to science and technology. Despite the threats and constraints, significant adjustments have occurred and steps forward were made in reforming educational structure, increasing accessibility and participation in primary education and providing equal rights for public. Universities and colleges have seen great increase in the number of students.

Education accounts for 20% of the total Government expenditures, however, budget allocations are still insufficient to resolve pressing issues of education and science sectors. Renovation and maintenance of buildings have been deferred for years, upgrading of textbooks and training materials is going slowly, social security of employees is under threat.

Presently, about two thirds of the children of preschool ages have no access to pre-school services and 51.6 % of pre-school buildings and more than 80% of school buildings need immediate renovation. Rural schools face difficulties of heating and electricity. Due to absence of attractive intensives and opportunities to earn extra income, rural schools are experiencing deteriorating supply of teaching staff. As an example, in 2000-2001 academic year, on state average, the deficit of teaching staff was 700, and this number has increased to 900 in the current academic year. It is evident that some of soum schools have no single teacher in some subjects. The number of private schools and kindergartens is increasing, however, state support is missing. All these have caused negative impacts on rationalization and restructuring of education sector and improvement of quality and relevance of academic programmes.

The management of cultural and art institutions have been left without adaptation to market economy principles. Buildings of rural cultural centers have become old, musical instruments, film cameras and facilities have become obsolete and as a consequence, cultural services do not satisfy interests and needs of the local population.

The capacities of scientific institutions have been gradually deteriorating. The comprehensive policy for human resource development is missing and as a consequence, the migration of qualified young researchers to well-paid jobs and business sector is evidenced. Scarcity of public funding to R&D has resulted in poor quality, irrelevance and less applicability of research outputs. Laboratory equipment and facilities have become out of date and require immediate upgrading. It is of great importance to pursue a comprehensive policy for efficient cooperation among education-science-industry. The current circumstances in education, science and cultural sectors require restructuring programme focused on mobilization of private sector service delivery and faster transformation of sectors to market relations.

1.2.            Goals and Objectives of Privatisation and Restructuring

The primary goal of the privatization and restructuring programme is to improve efficiency, effectiveness, quality and relevance of the educational, scientific and cultural services through adequate combination of state policy and principles of market competition.
In the pursuance of this goal the following objectives have been identified:

Ø To create favourable and stimulating legal environment;
Ø To ensure decentralization and capacity maintenance;
Ø To increase involvement of private sector in the education, cultural and science sectors;
Ø To strengthen autonomy of schools;
Ø To promote and introduce technological advancement in education, science and culture;
Ø To ensure better power allocation and minimize state intervention; and
Ø Support for market principles and relations while maintaining adequate public coordination.

1.3.       Scope. Timeframe and Participants

The following state-run educational, cultural and scientific institutions will be involved in the programme:
Ø All-level schools and preschool institutions;
Ø Research centers/institutes and National Corporation of Sciences and Technology; and
Ø Cultural institutions.

The duration of the programme is four years between 2001-2004.
All interested local and foreign institutions and individuals can participate in the programme.

1.4.       Primary Principles of the Programme

The following principles will apply to the institution involved in the programme:

Ø Ensure that the current level is not decreased;
Ø Ensure that scope of service is not shrunken;
Ø Provide evidence that directions and purposes of the service are not changed;
Ø Ensure that state budget allocation is not increased;
Ø Take measures for risk management and social security of employees; and
Ø Provide educational service to public regardless of territorial boundary.

1.5.       Public Policy for Financing

The following principles will apply for financing of educational, cultural and scientific institutions:

•  The certain amount of fixed expenditure of all-level schools, preschools and dormitories will be funded by the State. The rate of fixed expenditure to be funded by the State will be revised and determined by the General Budget Coordinating Body.
• Fifty per cent of food expenditure of preschool children and other variable expenditure of preschools will be funded from local budget.
• The variable expenditure of secondary schools will be fully financed by the State.
• The variable expenditure of students of vocational training institutions (VTI) will be fully funded from State budget.
• All expenses of students/pupils living in the dormitories of schools and VTIs will be fully borne by the State.
• The certain amount of variable expenditure of cultural and scientific institutions will be borne by the State. The rate and amount of expenditure to be funded by the State will be determined by the General Budget Coordinating Body.

Figure 1. Financing Patterns of State-Run Preschools and Schools and Responsible Parties

No Types of Expenditure Preschools and primary education Secondary school
1 Supply of textbooks Parents Parents
2 Training and retraining of teaching staff Consolidated budget Consolidated budget
3 Salaries of teaching staff  Local soum budget Aimag and city  budget
4 Salaries of non-teaching staff Local soum budget Aimag and city budget
5 Other patterns of expenditure Local soum budget Aimag and city budget

1.6.       Support for Learners

1.6.1. The State will be responsible for following services to students/school children:

• Free textbooks and other training materials of disabled school children and children of fully orphan family;
• Free textbooks and other training materials of school children from a socially disadvantaged and vulnerable family group;
• Free textbooks and other training materials to school children of civil servants whose more than three children study at the same time;
• Tuition fee of one student of civil servant;
• Tuition fee of one child from extremely poor families whose child has successfully passed university/college entrance examinations and is admitted to Bachelor, Master’s or Doctoral studies; tuition fee of one child from the family whose no less than two children are enrolled at university/college; and tuition fee of one child from herdsmen family who has no more than 500 small cattles;
• Tuition fee of a disabled or fully orphan student;
• Tuition fee of a student who has been awarded by participating in international Olympiads and contests;
• First two-year tuition fee of a student who has won first three places in National Olympiads and is admitted to the national university/college;
• Last two-year tuition fee of a student who has studied for four academic terms with GPA of not less than 3.8 without break; and
• Fifty per cent of two-way travel expenditure of a student who is from five Western aimags and study in Ulaanbaatar or cities/towns that are reached via Ulaanbaatar.

The following students are eligible to obtain soft loan:

• A partially orphan student; and
• A student whose family earns income less than the minimum level of living standard.

The following service fees of state-owned educational, cultural and scientific institutions will be elaborated by the Government:

• Food costs of preschool children;
• Extra service fee for professional or science-oriented programs at schools;
• Tuition fees students studying in intermediate courses of VTIs;
• Tuition fee of university/college students; and
• Fee of university/college dormitory.

CHAPTER TWO. PRIVATISATION AND RESTRUCTURING MEASURES

2.1. Restructuring of Education, Culture and Science Sectors

The measures to be undertaken within the framework of privatization and restructuring in education, sciences and culture are provided below.

2.1.1. The following changes will be made in order to increase efficiency and effectiveness of preschools and improve accessibility and participation in preschools:

Ø Elaborate standards of preschool education contents and develop training technology that matches contents;

• Improve professional capabilities of preschool staff;
• Introduce interdisciplinary and efficient programmes and build adequate preschool educational service structure;
• Enforce capital investment and strengthen financial mechanism of preschools to create vibrant and stimulating environment for preschool children;
• Determine and give guarantee for land ownership;
• Ensure that preschools organize advisory services to parents on developing the children and preparing them for school entrance; and
• Promote and support for establishment of private preschools:

2.1.2. The following reformative measures will be pursued in order to embrace efficient, effective and accessible secondary education:

• Provide conditions to shift to eleven-year school system and take measures for implementation;
• Ensure that children enter a school at age 6-7;
• Upgrade and strengthen training contents and standards;
• Strengthen and deepen integration of preschool and primary education;
• Establish vocational secondary schools for integrating training with labour and life necessities;
• Reform human resource policy, professional training structure and supply of teaching staff;
• Determine and provide a guarantee for land ownership; and
• Support for private schools by

2.1.3. The following reforms will be made with the aim to increase efficiency and ensure wider access to VTIs:

• Produce professional workers to match market demand;
• Reform human resource policy, professional training of staff and supply of teaching staff for vocational training schools;
• Stimulate and motivate actions for producing professional workers at the request of entrepreneurs and service providers;
• Determine and provide a guarantee for land ownership; and
• Support for private vocational training services by:

• Ensure relevancy of academic programmes, adequacy of location, efficiency of structure and management of higher education institutions and strengthen planning and policy development;
• Strengthen management structure and streamline power distribution among Government, local Government and universities/colleges;
• Approve a guarantee for land ownership of universities/colleges and create conditions for building university campus by expanding their territories;
• Strengthen financial management and create rationale financing structure;
• Review and determine fields of study that need the Government support and build state support scheme;
• Take systematic measures to produce and re-train teaching staff overseas;
• Introduce technology of developed countries by attracting foreign investment and supporting joint and foreign universities/colleges;
• Elaborate and implement system of intensives for financiers and benefactors who supported education sector through capital investment and service delivery;
• Fully utilize human and physical resources by strengthening inter-university cooperation and establishing inter-university facilities such as lecture halls, laboratories, learning and resource rooms, and other service centers; and
• Select and implement adequate type of accommodation services to students in order to increase accessibility and improve service quality.

• Exemption from customs taxes and VAT for the importation of classical and artistic dresses, musical instruments, scenery facilities and their spare parts; and
• Allocate the land for construction of building for private cultural centers.

• Re-organise Khovd branch school of the National University of Mongolia and make it Western province university;
• Merge Altai-regional branch school of the Agricultural University with the Western province university;
• In order to ensure autonomy of universities/colleges, separate Teachers College and College of Pedagogic from National Pedagogical University; and Musical College from the University of Culture and Arts;
• Align ARMONO Corporation with the University of Science and Technology to maintain quality assurance and expand laboratory resources;
• Re-organise and merge Museum of Arts and Museum of Theatre and set up Museum of Arts and Theatre to rationalize museum structure and management;
• Re-organise and align Bogd Khan Museum and Choijin Lam Museum and establish Religious Museum in order to strengthen institutional management and structure; and
• Align Corporation of Industry, Technology and Sciences of Agriculture with Agricultural University.

In order to intensify reform of management, structure and organization of educational, cultural and scientific institutions and improve their efficiency and effectiveness the following measures will be implemented:

Preschools (3-6 ages) will be re-organised as children development centers; and one kindergarten from each aimag and Ulaanbaatar district will be selected for the implementation of management contract after discussion of MOSEC with Aimag/City Assembly and Aimag/City Mayor. The aim is to create preconditions for study of first year pupils at kindergartens when secondary schools shift to 11-year and ensure integration of senior kindergarten and preparatory programs with primary school programmes.

In order to prepare students for life and give them necessary labour skills, improve training contents, better mobilize resources and ensure efficient use of fixed assets, VTIs in Arkhust, Bayankhongor, Nalaikh, Zaamar, Zavkhan and Selenge will be re-organised and aligned with local secondary schools after consultation with Aimag/Ulaanbaatar City Mayor and be contracted out under management contract.

The management of State Song and Dance Ensemble, Academic Theatre of National Scenes, Mongolian Movies Corporation will be contracted out for the purposes of increasing income sources and expanding service areas.

MOSEC will consult with the Academy of Sciences about merger of KhunsTech Corporation and Bee keeping/apicultural Cooperative in Batsumber under management contract. The aim of merger is to increase research and experimental outputs and income sources.

2.3.      Delivery of Services through Performance Contract

In order to maintain reasonable quality and improved resource mobilization and attract investment, the following services of state-owned educational, scientific and cultural institutions will be contracted out on performance basis:

• Student dormitory services;
• Wood preparation
• Heating of dormitories and school buildings;
• Butchery and food services;
• Kitchen and canteen;
• Laundry service;
• Office cleaning and maintenance;
• Production of musical instruments;
• Production of dresses;
• Repair and maintenance of buildings and engineering constructions;
• Repair and maintenance of equipment;
• Transportation service; and
• Postal service, bookshop, printing and copy service and other auxiliary services.

Clear and comprehensive information on services to be delivered under performance contract will be prepared by the institution prior to announcement of performance contract. The following items should be reflected in the performance contract:

• Terms and condition of use, repair and maintenance of state-owned buildings and equipment;
• Duration of contract;
• Requirements and specific conditions for the service;
• Amount of service; quality and term;
• Type and form of control over contract implementation;
• Fees and modes of payment;
• Terms and valuation of investment made by a contractor;
• Types and methods of solving disputes occurred during contract proceedings;
• Responsibilities for risk management; and
• Obligation by parties in case of failure to meet contract provisions.

A contractor will be selected through tendering. The Selection Committee for project will be established by he Administrative Organ of the particular institution. The contract will be made based on the Committee decision.

2.4.     Investment through Tendering

2.4.1. With the purposes to augment modern management and training methods, embrace technological advancement, increase capabilities of teaching staff and improve their professional skills, Master’s and Doctoral programmes of the School of Economic Studies, National University of Mongolia will be re-organised for foreign investment under the following conditions:

A. Principles for foreign investment:
 

• Conduct valuation of investment and specify investment rate by parties; and
• Ensure that imported training facilities and equipment satisfy international standard.

• Demonstrate evidence of experience in providing Master’s and Doctoral programmes at reasonable quality;
• Business plan for the improvement of services;
• Ensure that training secures quality of international standard; and
• Provision of social security for current employees.

International technical assistance will be sought for preparation of tender documents, announcement and selection of investors.

2.4.2. With the purposes to augment modern management and training methods, embrace technological advancement, increase capabilities of teaching staff and improve their professional skills, School of Communication and Information Technology of the Mongolian Science and Technical University will be re-organised for foreign investment under the following conditions:

A. Principles for foreign investment:
 

• Conduct valuation of investment and specify investment rate by parties;
• Demonstrate evidence of high technology comparable to international standard; and
• Ensure that academic programmes and research activities are internationally recognized and qualified professionals are produced.

• Demonstrate evidence of high-tech training resources and experience in providing particular programmes at reasonable quality;
• Ensure that teaching staff has learnt sufficient English;
• Business plan for the improvement of services;
• Ensure that training secures quality of international standard;
• Development of a business plan;
• Ensure that graduates are capable of working at local and international labour market; and
• Provision of social security for current employees.

International technical assistance will be sought for preparation of tender documents, announcement and selection of investors.

2.4.3. Local and foreign investment for Academic Theater of Classical Arts will be made under the following  conditions:

A. Principles of investment:
 

• Valuation of investment and specify investment rate by parties in accordance with international principles;
• Ensure that imported training facilities and equipment satisfy international quality standards, providing high technology and guaranteed quality service; and
• Create conditions for the continuum of high quality and art performance.

B. Criteria for foreign investors:

• Business plan for the upgrading services; and
• Provision of social security for current employees during the period of restructuring.

2.4.4. Principles for Foreign Investment

• An investor will be selected through tender process.
• The tender will be proceeded in accordance with applicable international procedures; and
• The tender will be open to local and foreign investors.

Youth and Children Theatre will be privatized under loan agreement. Special terms of privatization will be keeping the performance contents and directions as before, making investment, renovation of the building and serving youth and children.

CHAPTER THREE.  ACTIONS FOR THE IMPLEMENTATION OF THE PROGRAMME

3.1. Risk Management during the Process of Privatisation and Restructuring

The following measures will be taken to avoid and minimize risks:

• Establish system of academic accreditation for higher education;
• Involve VTIs in accreditation;
• Create external auditing and evaluation system;
• Upgrade all-level training contents and implement in order to provide reasonable service quality;
• Introduce Management Information System and International Accounting Standard in educational, cultural and scientific institutions;
• Set up system of performance indicators and introduce procedure for informing public on the results;
• Establish rating system in educational, scientific and cultural institutions and inform public on the outputs;
• Create system of intensives for discounted services to the vulnerable groups; and
• Build and improve capacities of Monitoring and Auditing Department of MOSEC and introduce evaluation and advisory services to beneficiaries.

The essential condition for the sustainability of the programme is creation of favourable legal environment for functions of legal parties founded during the implementation period thanks to privatization and restructuring measures.

The amendments should be made to the following legal acts:

1. Amendments to the Law of State and Local Property on methods of privatisation and its implementation specific to institutions of education, culture and sciences.
2. Amendments to the Primary and Secondary Education Law on possibilities of establishing vocational/professional oriented secondary school.

3.3. Preparatory Work for Programme Implementation

The following preparatory actions will be undertaken for the implementation of the programme:

1. Set- up of the Committee responsible for programme implementation delegated by relevant institutions;
2. Promotion of understanding and awareness of programme goals and objectives, principles among local community, organize workshops and training, wider use of media;
3. Broad collaboration with international organizations, relevant institutions of donor countries and interested parties; and
4. Print and disseminate brochures and handbooks to interested parties and public.

A mission consisting of Peter Moock, Charles Abelmann, and Christopher Thomas visited Mongolia between June 20-22 to participate in a meeting between the Ministry of Science, Education and Culture (MOSTEC) and the donor community assisting the education sector.  The mission met separately with representatives of MOSTEC to discuss a Ministry request for World Bank assistance.  It also conducted a field visit in a nearby municipal headquarters town and met with representatives of the Asian Development Bank, the largest donor to education in Mongolia.

The mission wishes to thank MOSTEC staff for generously sharing their time and expertise.  Special thanks go also to the staff of the Mongolian Foundation for Open Society (Soros Foundation) for organizing and hosting the meetings between donors and MOSTEC, and to Dr. Gita Steiner-Khamsi and Ms. Anh Nguyen for preparing issues papers that provided an excellent framework for discussion.

1.    Background

Mongolia’s education system risks deterioration stemming from unstable enrollments, inadequate financing arrangements and shortages of teaching and learning materials.  The situation is complicated by shifting governance arrangements, with increasing responsibility for financing and delivering education being devolved to local government or the private sector.  The impact of these changes is particularly strong on rural children living in very sparsely populated areas (where education is expensive to deliver) and whose local governments are least well equipped to deal with the emerging challenges.

In a world where growth is increasingly dependent on knowledge and information, a country with an education system at risk is itself at risk.  Economic growth and social cohesion depend to a large extent on the ability of the government to deliver a high quality basic education to all children and to build a higher education system that develops capacities to access global knowledge.

There is currently no World Bank education program in Mongolia.  In this sense, Mongolia is a special case among IDA countries.  Overall, IDA commitments to education are 10.3% of the portfolio; and Bank commitments for education within Asia range from $4 per child under 15 years old in the Philippines to $13 in Indonesia and $15 in Thailand.

MOSTEC officials noted that although education is one of the stated priorities of the Bank, so far the Bank has only dealt with education tangentially through broader poverty alleviation initiatives, rural development programs, or broader pieces of analytical work on privatization, public expenditures, or poverty reduction strategies.  Officials requested a more coherent and focused program of Bank support for the sector in Mongolia to help it achieve its “Education for All” objectives (currently 70% of children lack access to pre-school; 9% of 8-11 year olds are not enrolled school; and 18% of 12-15 year olds are out of school).

2.    Priorities

The mission worked with the Government team and donor representatives to identify priorities for educational development in Mongolia.  Participants reviewed the Government Education Sector Strategy, the Social Policy, a paper on “Underserved Areas of Educational Reform,” requests for additional donor assistance at the Paris Consultative Group Meeting and the donors’ response as well as current donor programs.  Participants broke out into small groups to hold detailed discussions on issues of rural education, urban education, and higher education and TVET.

The following priorities for additional assistance were identified:

1. The development of support systems for rural schools; including teacher education and support networks for isolated schools, development of village-level schools or schools to serve migrating populations, provision of textbooks and libraries, and infrastructure upgrades for Soum and Bagh schools.  It is expected that the interface between formal and non-formal education and the use of distance technology would be important features of a rural schools support system.

2. Teacher education; including strengthening of post-graduate education and improving capacities to teach English and Information Technology.

3. Education management; including assistance to refine funding formulas and funding mechanisms for basic and higher education, improve efficiency and financial management, improve education planning and management skills, create a framework for private investment in education, and develop an implementation strategy to extend the basic education cycle from 10 years to 12 years.

In addition, MOSTEC requested assistance in coordinating donors, so as to (i) ensure coherence among the many education reforms being pursued through projects; (ii) encourage information sharing and learning across various projects; and (iii) ensure that the management of education system does not fragment into several donor support project implementation units.

3.    Suggestions

The mission provided the following observations at the conclusion of the workshop:

1. Responsibility for the management of education in Mongolia appears to be increasingly decentralized to the Aimag and Soum levels and increasingly privatized (at least in the technical/vocational and higher education sub-sectors).  This will require MOSTEC to rethink its role in promoting equity and assuring quality and to develop capacities to correct imbalances that might arise in the system.

2. Education is also affected by migration to urban areas (which affects the placement of school) and changing aspirations (which affect the structure and content of schooling).  Strategies for delivering schooling to remote, sparsely populated and nomadic areas need to be sharpened, possibly with the introduction of village schools or improved distance education techniques.  Alternatives for extending the basic education cycle from 10 to 12 years need to compared.  And the curriculum of basic and technical/vocational education should be reviewed to ensure that it is in line with people’s career aspirations and likely patterns of growth.

3. Much more needs to be done to understand the financing of education and to ensure alignment between funding formulas and desired development outcomes.  Formulas should reflect student numbers.  They should also reflect the higher cost of educating children in remote areas and the greater educational needs of children in poverty and with other types of learning disadvantage.  Accountability systems need to be strengthened to ensure that funds budgeted for education reach local administrative levels and schools.  Finally, incentives for efficiency (particularly with regard to heating school buildings) need to be developed.

4. There are several models of teacher development, most operating on a pilot basis since the mid-1990s.  This is a good time to do a comparative study of teacher development programs in Mongolia and to consider scaling up one or more programs to the national level.  One of the largest programs is the “School 2001”, funded by the Mongolia Foundation for Open Society (MFOS).  Evaluations of this program has been positive and MFOS staff have indicated that they would be interested in continuing grant support for their program (possibly in partnership with bilateral or multilateral donors, which would be needed for “scaling up” to the national level), if MOSTEC decides that the program is worthwhile and replicable..

4.    Meeting with ADB

The mission met with Mr. Barry Hitchcock, Resident Representative for the Asian Development Bank.  The ADB is the largest donor to education in Mongolia.  It has assisted the Government with development of an education sector strategy and implementation of a first education project aimed at making the sector more cost-efficient and market orientated.  The ADB and Government are currently preparing a second education project with very broad policy and investment initiatives.  Mr. Hitchcock said that the ADB would welcome World Bank partnership in the sector, and asked for a signal by the end of the year about what areas the Bank may consider supporting.  This will help ADB in determining the focus its second project. He also suggested that the two Banks undertake joint sector work in one or more of the following priority areas:  (i) education financing; (ii) updating the education strategy and sequencing of education reforms; (iii) cost-effective provision of education in rural areas; and (iv) promoting public discussion of education issues.

5.    Next Steps

MOSTEC should take an active role in the continuing discussions on the Mongolian Poverty Reduction Strategy Paper (PRSP), the World Bank Country Assistance Strategy (CAS) and the jointly produced Public Expenditure Review (PER) to ensure that consensus is built within Government on the need to focus investment and expenditures in the education sector.

The Bank mission will hold discussions with CMU and SMU management to seek permission and funds to begin research and advisory services in Mongolia and possibly project preparation.  A formal request for further assistance from the Bank should be directed from MOSTEC to the World Bank Country Director for Mongolia (Mr. Ian Porter) through the Ministry of Finance.  A copy of the request should also be sent to Ms. Maureen Law, Director for Human Development, East Asia and Pacific Department.

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