1. Policy formulation since 1990
1.1    New Role of Ministry of Science, Technology, Education and Culture of Mongolia.

Prior to 1991, a number of Ministries had shared responsibilities for ensuring the successful operations of higher education institutions. These ministries were considered as vehicles for implementing decisions and regulations, and were not considered to be policy or decision making agencies. All higher education institutions had been owned and operated by the Government and were subject to all applicable governmental policies and regulations. In 1992 the Ministry of Science Technology, Education and Culture (MOSTEC) was established, based on the Education Law 1991 and all science and educational activities were subsequently placed under MOSTEC. This merger represented the government’s new intention that the Ministry would become involved with the policy formulation and higher education regulation.

Since then, MOSTEC’s role has greatly increased as a major player in the development of science and education. Its scope of activities now includes policy formulation, analysis, educational planning, and educational development (programme approval, staff development, institutional accreditation, accountability for maintenance of academic standards). The reform policy of the MOSTEC focuses on five aspects:

• Management and organisation;
• Educational structure;
• Contents and standard of education;
• Economic and financial aspects of education; and
• Rights and responsibilities of participants in educational relations, and their social issues

• Master Plan on Human Resource Development and Education 1994;
• The Government Policy of Mongolia on Education 1995;
• National development programmes;
• The Action Plan of the Government 2000-2004; and
• Education sector strategy 2000-2005.

• Education Law of Mongolia 1995; and
• Education Laws 1995: Higher Education Law 1995 (amended in 1998, 1999, and 2000)

1.2 Legal Framework and Policy for Funding of Pubic Higher Education Institutions

Financing of public higher education institutions has been elaborated in all above mentioned documents and composes of three main parts:

• State budget;
• Tuition fee; and
• Other sources of funding. Herewith, a brief description of each aspect of funding policy is provided.

A. State budget
In accordance with the Education Law 1995 (Chapter 5-33&34 Financing of Education and State funding of Education), no less than 20% of state budget should be allocated to education. It further specifies that state budget will be allocated to cover fixed costs of universities and colleges. Another method to fund public higher education is a student loan and grants system. According to this policy, students from low income families, disabled families, families of herdsmen with less than 200 heads of livestock, and students from partially orphan families have access to loan; orphan and disabled students are eligible for tuition fee grants; and students who demonstrated outstanding achievements (if win 1-3rd places in national and international Olympics) are exemption from tuition fee payment. Either loan or grants cover only tuition fee, but not stipend to cover living expenses, costs for purchase of books etc.

 B. Tuition fee
Since 1993 students attending higher education institutions have been charged tuition based on the full operating costs including salaries of staff and building maintenance. It is allowed to universities to set up tuition fee level and adjust it depending on inflation. The Education Law says that tuition fee is to cover instructional costs.

C. Other sources of funding

Education Law of Mongolia states that funding of educational institutions will be state and local budget, investment, tuition fees paid by local and foreign enterprises, and individuals, donations, soft loan and income generated by their own activities.
Higher Education Law of Mongolia was adopted in 1995 and amended in 1998, 1999 and 2000 respectively. The law determined the following sources of funding  (Chapter 8.articles 19&20):

• State budget;
• Tuition fee;
• Research projects;
• Income from affiliate enterprises;
• Loan and donations; and
• Other income sources.

2. Description of Policy Implementation

A. State Budget
On the expenditure side the Government of Mongolia aims to reduce total expenditures and net lending by 1% of GDP. The current Government expenditures are expected to decline from 37.06% of GDP in 1998 to a figure between 32-34% in 2000-2002. An overall implication of this policy is that education will unlikely to experience budget growth for the following years. In addition, state budget allocated to education has never reached 20% of national state budget as stipulated in the Education Law. In 1998 expenditure on education from the Government budget was 47,801.5 million tugrics or 14.7% of total state budget expenditure (Education Sector Strategy 2000-2005, p10). In 1999, only 3% of fixed costs of the National University were financed by the state.

The new Government has broadened the categories of students to be covered by loan and grants system. However, still very small percentages of students are obtaining student loan and grants. As an example, out of total 7,800 students of the National University of Mongolia only 250 students received financial support from the Government in the forms of loan and grants in the academic year 2000-2001. These 35 million tugrics allocated to the NUM through student loan have made 0.7% of the total university expenditure (2000-2001 academic year).

Generally, students pay around U$1200 for four-year Bachelor degree as a tuition. Other expenses include purchase of textbooks and supplies, living costs (food and clothes), accommodation (students from the countryside), copies, printing and transport ranging  from U$2400-3000 for four-year study. At current, the Government has not sufficient funding to provide stipends.

B. Tuition fee
Fees covering tuition (basic instruction) and related instructional services (registration, examinations, computer, access to library etc) were being set up at all levels that provided for full recovery of costs. Tuition fees cover almost 90% of operating costs of the higher education institutions, the highest of which are salaries of teachers (70% of tuition fee) (R.Bat-Erdene, S.Davaa&Yeager, 1999). Universities have become highly dependent on tuition fee and enrolment rate has increased by 2-3 times over the last few years.

C. Other sources of funding
An attempt to increase funding sources and income generation has faced a number of difficulties because of the following reasons:

• Imposition of tax on in-kind contribution of benefactors and financiers and the absence of non-profit corporation law in Mongolia have hindered the growth of University based income generation activities. As an example, the National University of Mongolian has been donated two buses valued at U$150,000 by Hyundai Motors. For the donation the University had to pay U$12,000 as a tax. Public universities are also regulated by the Law on Public Property. According to this law, public universities have to get permission from the State Property Agency to purchase, transfer and disburse any kind of goods and services. There is also uncertainty in applying the government policy about establishment of auxiliary enterprises within universities. The main issue is obviously tax status on revenues or surplus.
• It is not clear what is market potential to buy educational and training services. Here we have to find out what types of services and what fields of sciences and training have more potential for sale and what fields will be in discrimination. It has been a case that due to different demands; some faculties have got into poor economic states, while others into wealthy positions.
• It seems that there is a poorly developed culture of philanthropy and corporate sector is not accustomed to funding research and education. Most funds come from foreign sources and again from students’ pockets.  “Near-missers’ fee” or donation at the amount of up to U$1000 is imposed to students who failed entrance examinations, but are willing to enter the particular university. Many universities have established “Development Foundation” with the purposes of consolidating all income from such source and use it for enhancing physical capabilities of the University and textbook development.

3. Research imperatives
The funding policy of the Government has some deficiencies and created a number adverse results:

• Failure to intensify income generation activities and efficiency of universities: Due to vagaries of laws and the overly cumbersome bureaucracy in applying regulations the autonomy of universities is suffering.
• The missions of Universities to achieve international quality and create stimulating learning, teaching and research environment have severely suffered due to scarce funding. Deteriorating quality, inadequate physical conditions of learning and teaching and brain drain of qualified staff are real facts.
• Nor state budget neither student fee cover building maintenance and repairs and investment in expansion and renovation. Universities face vulnerability in investments for renovation and expansion, improvement of libraries and laboratories.
• Limited access and inequity: Access to quality higher education becomes limited to those students whose parents welfare cannot afford additional expenses such as donation, textbook purchase etc.
• Lobbying and corruption to obtain funding from various institutions such as National Science and Technology Foundation, international agencies for development etc.; and
• Failure to meet transparency.

4. Objectives of the Study

• The objective of the research is to more clearly specify problems and identify policy deficiencies;
• Examine different ways of overcoming these deficiencies; and
• Recommend the most promising solution.

A. Policy clarification: The study will clarify and quantify the policy problems in regard to state and non-state funding. The study will quantify how much of total budgets of universities are financed by the Government, whether it covers all fixed costs of universities and how much is financed through student loan system and grants.  In addition, the proportion of non-state funding and fields that attract much of private funding will be reviewed.

B. Evaluation of current policy: the proposed policy analysis study will evaluate to what extent the Government policy meets and fails to meet the needs of 1) universities 2) faculty members and researchers and 3) students.

C. Evaluation of alternatives
The researcher will seek solutions through examinations of policies of countries with similar situations (Russia, Slovenia etc). Advantages and disadvantages of each policy option will be reviewed.

D. Presentation of recommendations
Based on examinations, the researcher will recommend the most adequate policy alternative for consideration by the Department of Higher Education and Science, MOSTEC, Mongolia.

5. Research Methodology

5.1. Data collection, analysis and evaluation

Primary Data:

• Hiring one research assistant
• Development of survey questionnaires
• Interview and survey
• Analysis of data obtained through interviews and survey

• Identification of sources of data
• Collection of data and categorising data
• Data analysis

There are not enough secondary data accessible to public on the implementation of current policies, laws and regulations of the Government. Therefore the researcher aims to substantially use university internal sources such as annual report, budget and financial reports, report on loan students, university internal policy documents and procedures and self-evaluation reports. Interviews of chancellors of universities, vice-chancellors for finance and economic affairs, informal discussion with directors/deans of schools/faculties and meeting with faculty members from different faculties, business centers of universities will be conducted.

5.2 Anticipated research outputs

The final output of the research will be research monograph/article 25-30 pages length describing higher education funding policy problems and evaluation of new policy alternatives. The researcher plans to share the output of the study with Asian Development Bank and World Bank.

5.3 Dissemination of research outputs
 

• Participation at international conference of South East Asian Association for Institutional Research in Kuching, Malaysia;
• Workshops and round-table discussions (organized in cooperation with Consortium of Business Universities and Consortium of Universities); and
• Texts and articles in daily newspapers and NUM scientific journals.

5.4 Evaluation
The evaluation is aimed at review of intended achievements with actual achievements, deviations from the plan and funding to take timely corrective actions and alternatives. The researcher will develop progress and final report and submit to funding agency.

6 Duration

The estimated time for the research is one year.
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