Public Disclosure Authorized

Republic of Georgia

Public Disclosure Authorized Higher Education Sector Study

Prepared for the World Bank

by

Public Disclosure Authorized Nicholas Gvishiany David Chapman

June 2002

Public Disclosure Authorized Republic of Georgia: Higher Education Sector Study

Executive Summary

• The purpose of this study was to summarize key issues facing higher education in Georgia and present options for addressing those issues.

Overview

• The stated goals of Government are to strengthen the quality of higher education and to shift increasing portions of the cost to students without reducing the access of less affluent students to higher education.

• At the central level, higher education is managed by the combined efforts of the Ministries of Education, Finance, Economy, and the Office of the State Chancellor (e.g., President). Some specialized universities are under the control of other ministries. The Council of Rectors plays an important role at the national level.

• The legal and regulatory framework of higher education is under intense review. In June 2001, the Georgia Parliament initiated a project to formulate directions for continued development of higher education. Results of their deliberations have not yet been embraced by the MOE.

• There are 26 public universities that, in addition to their main campuses, have a total of 18 branches, for a total of 42 public university campuses across Georgia. In 2002, a total of 209 licenses have been granted for private universities, of which 153 were actually in operation.

• The number of students in public higher education dropped by about 10% between 1991 and 1999 but increased again by 2002, due mostly to increased numbers of fee paying students. Fee paying students enrolling in public universities is the fastest growing segment of higher education. Private university enrollment has declined as a percent of overall students enrolled in higher education. Private university enrollments dropped from 38.7% of higher education students in 1997 to 26% in 2001.

• Student admission to public universities is on the basis of state orders (e.g., state sponsored scholarships) allocated by the Ministry of Economy, Industry and Trade, ostensibly on the basis of perceived demand for specific professions. These state orders are awarded on merit, without consideration of financial need. Some evidence suggests that the admissions process for state order places is sometimes influenced by non-academic factors.

• Admissions criteria for fee-paying students are determined separately by each institution and criteria vary widely across institutions and among programs within the same institution. A dominant consideration is students’ able to pay the tuition.

Internal Efficiency Issues

• Low student:teacher ratios in public is a major source of internal inefficiency. State universities have an overall student/staff ratio of 7:1; private report a student/teacher ratio of about 4.9:1. Both institutions and individual staff members have strong financial incentives to maintain high staffing levels. However, the number of academic and research personnel could be reduced substantially without negatively affecting the quality of instruction

• Reasons for the low ratios include (a) universities’ reluctance to downsize personnel out of concern for the welfare of those who would lose their jobs, (b) the large number of highly specialized programs and (c) the large number of research staff currently being supported within public universities.

• One option to improve staffing ratios would be to institute an attractive severance package in which those willing to leave university employment would get sufficient funds to offset their loss of benefits. A second option would be to assure universities that monies saved through downsizing would return to the universities for them to invest in ways that would increase institutional quality.

• Quality of higher education is widely regarded as falling. Contributing reasons are (a) the drop in the preparation of incoming secondary students, (b) the prevalence of patronage and bribery in the assignment of student test scores, and (c) the decline in state funding of higher education.

• Quality control of Georgian higher education is supposed to operate through a four-part system involving licensure, controls on who is credentialed as a professor, attestation and accreditation. In practice, these mechanisms have not worked well and establishing an effective institutional accreditation process remains a MOE priority.

• At present, the licensing process does not provide the intended quality control function. A new licensing law was just enacted in May 2002. Under this law, the MOE has six months to develop clear criteria and procedures for licensing higher education institutions. If it us unable to meet that deadline, private universities will not be required to be licensed.

• There is widespread abuse in the administration and utilization of university entrance examinations for determining admissions and state order scholarships. One response would be to remove the admissions testing function from individual universities and create a nationwide university admissions test administered by a central agency.

External Efficiency Issues

• The allocation of state order scholarships has no demonstrable relationship to labor market demand. However, government is under strong pressure from universities to continue the process as a means of providing state subsidies to public universities. One possibility to improve the allocation of state funds to higher education would be to drop the state order system and shift to direct state subsidies of public universities. • Instruction offered at universities is poorly aligned with the needs of employers.

• At present, the secondary schools and universities of Georgia lack effective systems for collecting and sharing career information.

• It is difficult for students to transfer across departments or across universities, resulting in external inefficiencies, as students who discover they have no interest or no aptitude for an area of study (and eventual employment) are unable to reposition themselves.

• Private institutions have total control over whom they admit and the criteria they use in making those decisions.

• The ability of students to transfer their enrollment across institutions or across departments within the same institution is extremely limited.

Cost and Financing Issues

• Central government allocations to higher education have declined over the last five years. In 2001 Georgia allocated 3.8% of its central budget to education. Of that amount, 55% was allocated to higher education. Overall, 2.1% of the total government budget was allocated to public higher education during 2001. This percentage is well below the 1998 level of 3.4% and slightly below the 1999 and 2000 levels (of 2.3% and 2.2%).

• The effort of the universities to protect personnel has come at a high cost. Over the last five years, university expenditures increased by 100-200% while salaries went up by 200-300%. During that time, with notable exceptions, virtually all other expenditures have decreased.

• The funding of education in Georgia has become increasingly privatized during the over the last ten years. Approximately 56% of total university revenues come from student fees, 41% from the state budget, and the remaining 3% from other sources.

• Higher education, universities have resisted actions they might have taken to reallocate and better utilize the resources that are available to them. Given this university resistance it is unclear how increased state subsidies to higher education would result in improved quality of instruction or institutional operation.

• Unit cost during 2001/02 indicate per student expenditures ranging from 75 to 1246 lari per year. The unit cost of fee paying students was generally, but not always, higher. Some evidence indicates that fee paying students provide a considerable subsidy for state sponsored students.

• University fees represent a major expenditure for students. In 2001, tuition in many university programs was more than 50% of the average family income.

• Private tutoring is pervasive and represents a significant informal cost of higher education for many students. The tutoring is necessitated partly by the poor quality of education in secondary schools and partly by teachers’ efforts to obtain supplementary income.

Access and Equity Issues

• Access for poor students to higher education has declines sharply, mostly due to the increased emphasis on cost sharing that discourages or excludes less affluent students. There is an urgent need for government to moderate the impact of cost sharing through such mechanisms as need-based state scholarships and student loan programs and to reduce the importance of private tutoring.

Administration and Management Issues

• Education data collected from different sources often do not agree. This makes realistic planning difficult, undermines stakeholders’ confidence in the management of higher education, and provides opponents of particular policies with a basis for discrediting policies they oppose. One possibility for strengthening the management capacity of the higher education sector would be the development of campus-based and government-wide higher education management information systems (EMIS).

• Many mid and senior level university officials lack formal training in higher education management and administration.

Twelve recommendations are offered as a means of encouraging discussion about policies and strategies for strengthening higher education in Georgia.

Recommendation 1: Discontinue state order scholarships. Shift to a system of directly subsidizing state universities based on criteria directly linked to their educational effectiveness and operational efficiency.

Recommendation 2: Institute need-based scholarships as a means of reducing the exclusion of poor children from higher education. Scholarships would still be granted to those demonstrating the most merit, but only if they can demonstrate financial need.

Recommendation 3: Conduct a study of the feasibility of implementing a system of need-based student loans for students enrolled in university level education.

Recommendation 4: Implement an attractive severance package aimed at encouraging university staff to resign.

Recommendation 5: Merge or abolish academic program with low enrollments.

Recommendation 6: Ensure that cost savings achieved by higher education institutions in downsizing staff and consolidating programs return to those institutions for reinvestment in quality improvement. Recommendation 7: Create and ensure rigor in the accreditation process.

Recommendation 8: Reduce taxes for both public and private higher education institutions. Tie eligibility for these tax breaks to institutional accreditation. To the extent that the accreditation process operates as a serious mechanism to both encourage and assess quality, the tax breaks can serve to help raise the quality of higher education.

Recommendation 9: Extend and strengthen the management information systems at both the university and central government levels.

Recommendation 10: Reexamine the rationale and consequences of the current restrictions on sharing of institution level data that are already collected by units of government, with specific attention to the State Department of Statistics

Recommendation 11: Undertake tracer studies to collect information on ways universities can improve the relevance of their curriculum and pedagogical practices.

Recommendation 12: Undertake short- and intermediate-length training programs in higher education administration..

Republic of Georgia Higher Education Sector Study

Table of Contents

Executive Summary Table of Contents List of Tables List of Figures and Annexes

PART A. Overview of higher education in Georgia A.1. Status A.2. National goals and strategies A.3. Organizational structure A.4. Legal and regulatory framework A.5. Enrollment A.5.1. Student admission to public universities A.5.2. Student admission to private universities A.6. Student flow A.7. Instructional staff A.8. Academic Program A.9. Language of instruction A.10. Curriculum, textbooks, instructional materials A.11. Evaluation of student performance A.12. Institutional accreditation and quality control A.13. Facilities and equipment A.14. Costs and financing of higher education A.14.1. Budget process A.14.2. Expenditures A.14.3. Unit costs A.14.4. Financing of higher education A.15. Donor support of higher education PART B: Main Issues Confronting Georgian Higher Education B. 1. Staffing levels and deployment of personnel (a) Low student:teacher ratios (b) Consolidation of specialized programs of study (c) Integration of teaching and research staff B.2. Ensuring the integrity of decisions about university admissions and subsequent student performance (a) Integrity in admissions decisions (b) Integrity in assessing student performance B.3. Deteriorating quality of higher education (a) Declining prior preparation of entering students (b) The decline in state support of higher education (c) Inefficient allocation of resources B.4. Weak alignment of higher education with labor market needs (a) State order scholarships (b) Curriculum - labor market alignment (c) Over-specialization (d) Student access to labor market information (e) Student mobility across departments and institutions: B.5. Inequitable access to higher education (a) Moderating the impact of cost sharing -- Need-based state scholarships -- Student loan programs (b) Use of tutors (c) Compensatory programs B.6. Stronger systems for administration and management (a) Licensure, accreditation and quality control (b) Management information system (c) Aggressive law enforcement (d) Informal nature of university level management (e) Training in higher education administration: B.7. Clarify spending priorities as a means of adapting to reduced funds for higher Education (a) Clarify higher education spending priorities (b) Create incentive for increased institutional efficiency. (d) Forward budgeting

Part C: Recommendations Recommendation 1: State order scholarships Recommendation 2: Need-based scholarships Recommendation 3: Student loans Recommendation 4: Severance incentives Recommendation 5: Program consolidation Recommendation 6: Incentives for downsizing Recommendation 7: Accreditation Recommendation 8: Taxes Recommendation 9: Management information system Recommendation 10: Sharing data Recommendation 11: Tracer studies Recommendation 12: Training in higher education administration

References

List of Tables

Table 1 Distribution of secondary school graduates, 2001-2002

Table 2 Public High Education Institutions by Status, 2002

Table 3 Summary data on private higher education in Georgia by district and year, 1996-2000

Table 4 State Institutions and number of students by types 1997-2001, (at beginning of school year)

Table 5 Tuition paying students as percent of total enrollment at State Universities

Table 6 Number of Students in State High Education Institutions, 2001-2002

Table 7 Full time enrollment in private universities as a percent of total higher education enrollment, 1999/00 - 2001/02

Table 8 Teaching staff in public higher educational institutions, Republic of Georgia 1997-2001 (at beginning of school year)

Table 9 Number of hours required for full time teachers per year in selected universities, 2001/02

Table 10 Student - teacher ratio in public and private Georgia universities

Table 11 Student-Teacher Ratios in Higher Education in Georgia and Selected Countries

Table 12 Proportion of Research Staff as Selected Universities

Table 13 Central Budget Expenditure on Education and Higher education. 1998- 2002 (000’s Lari)

Table 14 Institutional Expenditures in selected higher education institutions (Using 2001 academic year actual expenditure data provided by institutions)

Table 15 Unit costs per student in Georgian Higher education, Selected state Institutions. 2001-2002

Table 16a Expenditures per student and per staff member in selected higher education institutions, Ministry of Finance data, 2001-2002 (in Lari)

Table 16b Institutional Expenditures per student and staff member in selected higher education institutions, 2001-2002 (in Lari) (data provided by MOF and MOE)

Table 17 Institutional Expenditures per student and staff member in selected higher education institutions (MOE data), 2001-2002 (in Lari per year) (data provided by institutions)

Table 18 Distribution of Overall Education Expenditures by Level of Education, 1999

Table 19 Local and central education expenditures by level of education, 1998-2000

Table 20 Tuition charged fee-paying students in selected in selected public universities, 2001-2002 (fee rates are given for baccalaureate in US$ p.a.)

Table 21 Sources of Revenue in Public and Private Higher Education Institutions by Unit , 2001-2002

List of Figures

Figure 1 Organizational Chart of the Ministry of Education

List of ANNEXES

ANNEX 1 Number of higher educational institutions by district

ANNEX 2 Enrollment in higher education institutions by district

ANNEX 3 Number of public universities and student enrollment by district, 2001/2002

ANNEX 4 Number of Students in Private High Education Institutions, 2001-2002

ANNEX 5 Basic Indicators for Higher Education - Students

ANNEX 6 Institutional budget for selected institutions - 2002

Republic of Georgia Higher Education Sector Study

Prepared by

Nicholas Gvishiany, Tbilisi based consultant David W. Chapman, University of Minnesota

27 June 2002

The purpose of this paper is to summarize key issues facing higher education in Georgia and present options for addressing those issues. Part A briefly describes the university system in the Republic of Georgia. Part B presents an analysis of key issues now confronting the higher education subsector and suggests policy options that might help address those issues. Part C offers a series of recommendations intended to encourage discussion among key stakeholder groups concerned about higher education in Georgia..

PART A. Overview of higher education in Georgia

A.1. Status

Students completing secondary education in Georgia have five options available to them upon graduation. They can continue their education in a public university as a state sponsored student, they can enroll in those same universities as a fee paying student, they can enroll in a private university, they can attend a postsecondary vocational or technical school, they can continue their studies abroad, or they can immediately enter the labor market where they can either find a job or be unemployed. Table 1 summarized the distribution of 2001 graduates across these options.

There are 26 public universities that, in addition to their main campuses, have a total of 18 branches, for a total of 44 public university campuses across Georgia. Of these 26, five have the status of autonomous universities and operate as separate spending units in the annual state budget. Nine are under the direct administrative control of the Ministry of Education and the remaining twelve are under the administrative control of other ministries, as detailed in Table 2.

A total of 209 licenses have been granted for private universities. In 2002, however, only 153 of these institutions were actually in operation with a combined student enrollment of 31887, representing 21.6% of students enrolled in higher education nationally. The others, though licensed, did not operate, sometimes from a failure to recruit a sufficient number of students. Table 3 summarizes the regional distribution, size, and enrollment growth of private universities from 1996-2000.

Universities are distributed around the country, though the largest tend to be in the urban areas. The distribution of public and private universities by region is reported in Annex 1. In the last three years, enrollments in public universities increased while enrollments in private universities stayed about the same (Annex 2). Nearly all of this growth was due to a rapid increase of fee- paying students entering public universities (Table 4). One consequence of this trend was that access diminished for low income students, less able to afford the fees.

A.2. National goals and strategies

The stated goals of Government are to strengthen the quality of higher education and to shift increasing portions of the cost to students. It wants to accomplish these ends without reducing the access of less affluent students to higher education.

A.3. Organizational structure

Figure 1 presents the organizational structure of the higher education sector in Georgia. At the central level, higher education is managed by the combined efforts of the Ministries of Education, Finance, Economy, and the Office of the State Chancellor (e.g., President). Some specialized universities (sports, defense, intelligence) are under the control of other ministries.

The Council of Rectors also plays an important role at the national level. Members of the Council are appointed by the President and the Council serves as an advisory board to the President and relevant ministries on matters relating to higher education. As draft policies are formulated by line ministries, the Council reviews them and advises the President prior to his final approval. While the role of the Council, at a formal level, is only advisory, it has enormous public stature in the country and its recommendations carry great weight.

At the institutional level, the administration of higher education is extremely centralized and rests with the rector. In public universities, the rector is appointed directly by the President of Georgia. The rector directs the activities of a school and supervises the Scientific Council of the institution (which consists of the rector, vice-rectors, deans, heads of departments, an academic secretary, and several representatives of administration). The Scientific Council approves curricula, projects, and scientific reports and supervises the elections of heads of departments, professors, deans, and the rector. Rectors are assisted by vice-rectors, who supervise specific areas of operation (e.g., scientific, educational, distant learning, etc.). Deans direct the educational activities of particular academic divisions. Heads of departments lead the instructional and scientific work of their departments (see Machavariani, 2001)

The manner in which rectors are appointed in private universities varies. Rectors of private universities are often appointed by the owners or founders of the university. Some private universities have the status of non-governmental organizations (NGOs) and are governed by a Board of Directors which appoints the rector.

A.4. Legal and regulatory framework

In September 1995, the Ministry of Education formulated a “State Program for Education Reform and a Plan for its Realization” that was endorsed by the Cabinet of Ministers and served as a blueprint for higher education reform (Perkins, 1998). This reform effort continued with passage of the 1997 Education Law aimed at more closely aligning the Georgian education system with international practice. The provisions of the Reform Program and the Law most relevant to higher education included (a) the legalization of private universities, (b) regulations concerning licensing and accreditation, (c) curriculum reform, (d) the continued provision of state scholarships based on government estimates of labor market need, and (e) the creation of the two-tier, four-plus-two system leading to bachelor and masters degrees, respectively (Lorentzen, 1999; Gurgenidze, 2001).

A number of private universities opened soon after passage of the Law. However, private universities face a different regulatory and tax regime than their public counterparts. Both public and private institutions must pay property and profit taxes of 20% on fee income. Additionally, all universities pay a 31% social charge, a tax which covers retirements, medical, and other social benefits. This works against private institutions that do not receive state order scholarships for their students.

Private universities must secure a license to operate from the MOE which, in theory, is granted on the basis of a review to ascertain that the institution has an appropriate curriculum, staff, financial resources and facilities. In practice, it is doubtful that the licensing process represents effective public oversight of these universities. The proposed academic programs are not subjected to independent review. On occasion, institutions seeking a license copy and submit the academic programs of other universities that are already licensed by the Ministry. Circumstantial evidence suggests that licenses can sometimes be bought (Lorentzen, 1999). In practice, license applications seldom are refused.

At present, the licensing process does not provide the intended quality control function. Stakeholder interviews confirmed the low prestige associated with licensure and the low credibility of the licensing process (cf. Shahriari 1999, 26). The licensing procedures, if is to be effective, will require a more serious implementation effort.

The legal and regulatory framework of higher education is under intense review. In June 2001, the Georgia Parliament initiated a project to review, debate, and formulate directions for continued development of higher education. The project, supported by the Council of Europe and the Open Society – Georgia Foundation involved a distinguished group of educators, business leaders, government officials, and international representatives in discussion about the purposes and strategies for reform. Results of the deliberations are published in The Main Directions for Higher Education in Georgia (Open Society, 2002).

Among the main recommendations were to liberalize access, increase transparency, upgrade the capacity of the instructional staff, and improve the integrity of the examination system. The commission recommended a move to need-based scholarships and the creation of need-based student loans, strengthening the accreditation process, and downsizing academic staff, but doing so in ways that ensure their social protection. They also recommended extending and clarifying the dimensions of institutional autonomy of higher education institutions. A new licensing law was just enacted in May 2002. A key provision is that the MOE has six months to develop clear criteria and procedures for licensing higher education institutions. If it us unable to meet that deadline, then private universities will not be required to be licensed. In that case, it is anticipated that quality assurance will be handled through the accreditation process.

A.5. Enrollment

For admission to higher education, a candidate must be at least 16 years of age, be a secondary school graduate (11 grades), and submit a secondary school certificate and/or a vocational school diploma. Eligible candidates must take a university entrance examination that is offered once a year, in all subjects, on the same day. Candidates may take examinations in up to four subjects during that testing period but if they want to take examinations in more than four subjects they can only do so during the examination period in a subsequent year. Candidates can only apply to one program in one university in a given year. The level of competition for each vacancy on the admission list differs by departments and candidate/vacancy ratio varies between 1:1 and 1:15 (Gurgenidze, 2001). Candidates who fail the entrance examination may reapply the next year.

Each university designs its own admissions tests and selection policy. Examination committees, which prepare and score the examinations, are appointed by the rector and committee membership rotates on a regular basis.

The number of students in public higher education dropped by about 10% between 1991 and 1999 (from 104,000 to 95,000 students) but increased again by 2002 (to 115,546), due mostly to increased numbers of fee paying students. Fee paying students enrolling in public universities is the fastest growing segment of higher education. They accounted for 10.7% of enrollment in 1994/95 and by 2001 had increased to 43.3%, a more than 400% increase in eight years (Table 5). The distribution of fee paying students in public universities (and branch campuses of those universities) is reported in Table 6. The proportion of fee paying students as a percent of total enrollment in state universities is reported in Table 5. Further detail about the enrollment in public universities is provided in Annex 3.

Private university enrollment has declined as a percent of overall students enrolled in higher education. Table 4 reports the pattern of enrollment growth by type of institution between 1997 - 2001. More detailed analysis of enrollment by programs of study are presented in Annex 4. Across both public and private universities, over half of all students now pay tuition.

Private university enrollments, which had represented 38.7% of higher education students in 1997, had dropped to 26% of all higher education students by 2001 (Table 7). About two-third of the enrollment in public higher education was full time, while the remaining one-third studied on distance learning programs. In the private sector, almost all students were full time (World Bank, 2001, Georgia: Public Expenditure Review). In the private sector, nearly all enrollment was full-time.

A.5.1. Student admission to public universities: The allocation of state order (e.g., state sponsored) places in higher education involved multiple ministries. The Ministry of Economy, Industry and Trade annually determines the number of students to be admitted in each field of study for each state university. The Ministry of Finance then has to make provision in the annual government budget for the funds necessary to support these students. The Ministry of Education, which has responsibility for the operation of 11 institutions and the other ministries that are responsible for universities have to ensure adequate instructional resources are available at their institutions. The number of state sponsored places at each public institution is determined annually by the Ministry of Economy (MOEC), ostensibly on the basis of perceived demand for specific professions. This system has come under intense criticism and is now being reexamined, a topic that will be discussed later.

Under the law, state sponsored places are awarded on merit, without consideration of financial need. Students seeking state-sponsored places are selected through a competitive examination administered annually. Some evidence suggests that the admissions process for state places is sometimes influenced by non-academic factors, a topic to be discussed later. However, evidence suggests that top students are able to secure state sponsorship on the basis of their abilities while lower ability students may choose to seek state sponsorship through other means.

Admissions criteria for fee-paying students are determined separately by each institution, so criteria vary widely across institutions and among programs within the same institution. Student scores on the entrance examination are also a factor, but not necessarily a controlling factor, in who is admitted. A dominant consideration is students’ able to pay the tuition, since financial aid (e.g., scholarships, loans) are not available.

There is no policy determining the ratio of state sponsored and fee-paying students that are admitted and, in practice, the ratio varies widely across institutions and programs within institutions. An informal guideline used by some of the larger institutions is a 1:1 ratio, but in high demand areas, such as law, the proportion of fee-paying students is substantially higher. If there is a demand, most programs will admit more fee-paying students.

A.5.2. Student admission to private universities: Private institutions have total control over who they admit and the criteria they use in making those decisions. Their level of student intake depends entirely on student demand, leading to rapid enrollment increases in fields such as law and business.

Until 1999, students could only to apply to one program in one institution during a year. In 1999, the admissions procedures were modified to delay the timing of admissions decisions in private universities until after students learned the outcome of their public university application admissions decisions. This effort was abandoned the next year due to resistance from the state universities officials. They were concerned that students who did not receive state order scholarships would chose private universities instead of remaining at the public university as a fee paying student. However, in response to criticism from private universities, the admissions procedures has once again been modified to allow students not awarded state order scholarships to still apply to a private university in the same year. This shift is a very positive move toward improving the efficiency of higher education. A.6. Student flow

Data on degree progress (attrition, grade repetition, and completion) are not collected centrally and often are not collected at the institutional level. The lack of these data impedes the analysis of system efficiency. However, some evidence indicates (a) that the rate of student progress toward their degree is faster in private than in public institutions and (b) that attrition in private universities is lower, an observation consistent with international research suggesting that paying tuition motivates students to move through their program more diligently and quickly (Lorentzen, 1999; Johnstone, 2001).

The ability of students to transfer their enrollment across institutions or across departments within the same institution is extremely limited. Some universities have moved to a Western credit system which is intended to facilitate such mobility. However, the larger set of procedures and agreements needed for this type of mobility is not yet in place.

A.7. Instructional staff

There are four categories of teaching staff. Full-time staff are those who teach 450-700 hours per year. Part-time faculty are regular employees of the university but teach less than full time, perhaps because they allocate some of their time to a research institute or other university function. A third category includes individuals who are employed elsewhere but come to campus to teach a particular course. The fourth category includes instructors paid on an hourly basis to serve as substitute instructors or assist another instructor on a temporary basis. The distribution of instructional staff across these categories and the change in this distribution between 1997 and 2001, as reported by the institutions themselves, are summarized in Table 8. Individual instructors may simultaneously fall into two or more categories, for example, a person may be teaching a full-time load as a full-time instructor and also be teaching an additional course as a part-time instructor.

A full-time teaching load is defined as 450-700 instructional hours per academic year for which instructors earn about $40 per month. The number of hours differs by institution, as illustrated in Table 9. Faculty salaries for teaching in the state financed track are set by the Ministry of Finance and are the same for all public universities. For teaching a full-time load, instructors with PhDs receive 60 lari per month; those with masters receive 42 lari per month, and non- degree teachers receive 37 lari per month. There are salary augmentations for serving in an administrative position (e.g., head of department, dean of faculty) but generally these augmentations amount to an additional 5-15 laris per month. Tbilisi State has additional 30 lari per month for all its employees, granted in recognition of its special status in the country.

The low salary forces virtually all instructors to seek supplemental income. A common pattern is for institutions to hire these same instructors to teach a second full-time load, paid for by tuition earned from fee-paying students. [In practice, state students and fee paying students are merged in classes. However, the income from tuition paying students is allocated to instructors as a way of topping up their salaries.] Instructors can earn more from this supplement than they earn from their state salary. In Tbilisi State, for example, the additional salary paid instructors from student fees is 160 lari, which is 2.6 times higher than regular state salary amount. A comparable ratio applies in the other four institutions in Table 9. Overall, the average pre-tax salary for PhDs is 220 lari per month, about 160 lari per month for a masters, and about 130 lari per month for non-degree instructors. The national income tax is 22 %. Many instructors at state universities supplement their salaries by also teaching at private universities. Even teaching two full-time loads, some instructors find the salary insufficient and seek third jobs.

Universities do not have a measure of full-time-equivalent faculty. Consequently, it is not currently possible to compute an unduplicated number of teaching staff currently employed at Georgian universities or to compute an accurate student:teacher ratio. Nonetheless, it is clear that higher education in Georgia is labor intensive. State universities have an overall student/staff ratio of 7:1 (Table 10); private report a student/teacher ratio of about 4.9:1, low relative to other countries (Table 11). Current MOE estimates of student:teacher ratios in both public and private higher education is reported in Table 3.

These overall ratios hide considerable differences in student-teacher ratios across and within institutions. For example, at the GTU, the student-teacher ratio ranged from 13.2 in informatics to 3.2 in architecture. This suggests significant efficiency losses in the deployment of resources within the higher education sector (World Bank, 2001).

One reason for the low student-teacher ratios in state universities is that when enrollment dropped during the mid-1990s, universities did not fire instructors. The continued use of the state order system to allocate state scholarships also contributes to low student:teacher ratios, when universities pressure government to fund more state order places than can be justified by labor marker needs. University rectors sometimes exert this pressure to secure funds that will let them avoid releasing excess instructional staff. Different factors explain the low ratios at private universities which, presumably need higher student:teacher ratios to earn a profit. There is some indication that the number of teaching staff reported by private universities is artificially inflated as a means of giving the appearance of higher operating expenses, thereby reducing their tax liability.

In addition to the employment of a large number of teaching staff, some higher education institutions employ a large number of scientific research staff. While an overall summary of the proportion of research staff to total professional staff could not be found, this information is summarized for selected institutions in Table 12. These staff often do not teach in the academic program, but are devoted full-time to their research activities. However, since universities have not received funds to upgrade their basic and advanced research capacity, this level of public expenditure is questionable.

The qualifications of teaching staff have changed considerable since the Soviet period. In 1990/91, 43.5% of the teaching staff in public universities held postgraduate qualifications (Table 8). This share fell to about a third in 1995/96, rose to over 50% a year later. By the 2001/02 school year, this had dropped to about 35%. In private universities, teaching staff with postgraduate education rose from about 12% in 1995/96 to over 52% in 1996/97, and dropped to 11.5% in 2001/02. One reason that the same pattern is seen in both public and private universities is that many of the private-sector teaching staff are instructors from public universities who have second jobs in the private sector. Across both public and private universities, relatively few (4-8%) of the teaching staff in 2001 had Ph.D.-level qualifications.

The sharp drop in highly qualified staff from 1996/97 to 2001/02 suggests that both public and private institutions face a problem of retaining highly qualified staff, even at a time those institutions have an over abundance of instructional personnel. The loss of the strongest personnel is unlikely to diminish, especially in the context of a recovering economy that offers alternative employment opportunities for highly qualified people. However, this pattern (loss of qualified staff) is an indicator of downward pressure on instructional quality in both public and private universities.

Frequent delays in payment of salaries have been a serious problem for faculty at state universities. The average delay was between 2 - 4 months. These delays are consistent with the experience of other public sector employees. However, this situation, in combination with the low compensation levels, exacerbates the tendency of instructors to hold supplemental employment and reduces the ability of state universities to call upon their instructional staff for other institution building activities (discussed later).

A.8. Academic Program

The degree structure in Georgian universities is divided into three levels. In the past, the first degree required five years of university study after which successful students earn a magistry degree (comparable to a masters degree). An additional three years of study (including completion of a dissertation) was required to earn a Candidate of Sciences degree. Additional study that involves the preparation of a doctoral dissertation of significant intellectual stature is required to earn a Doctor of Sciences degree (Gurgenidze, 2001).

The 1997 Law on Education introduced the four-year bachelors degree followed by a two-year masters degree. This move was taken to promote a more generalist curriculum at the bachelors level and delay specialization until the masters level. The rationale for this shift was that the generalist preparation provided bachelors graduates with more job mobility at a time that the economy was in rapid transition.

However, this shift has not yet been completed accepted. Surveys of teaching staff and interviews with university officials and employers indicate that the undergraduate stream is not always held in high regard. First-tier graduates appear to have more problems than second-tier graduates in finding a job in their profession. One possibility is that the introduction of four- plus-two merely split the previous five-year, single-track program without sufficient modifications to the contents of the curriculum (Lorentzen, 1999).

A.9. Language of instruction

Georgian is the primary language of instruction at all universities. Eighty-eight percent (88%) of all university students receive instruction in the Georgian language, followed by 4.6% in Russian, 6.6% in German, French and English, Azeri, and Armenian. Since Georgian was the official language of Georgia even during the Soviet era, there is no shortage of textbooks and instructional materials in the national language as experiences in several other central Asian countries (e.g., Azerbaijan and Tajikistan).

A.10. Curriculum, textbooks, instructional materials

The curriculum across most universities is characterized by over-specialization, resulting in many separate departments, many with very low enrollments. Annex 5 reports enrollment by program of study and university. While there is wide recognition that this over-specialization increases cost, many university leaders fear that the consolidation of programs could result in the loss of capacity that will someday be needed. There is also a concern at the universities about the personal consequences of consolidation on the staff that would no longer be needed.

The introduction of fee-paying students in pubic universities has created a market force that is already reshaping the curriculum. Fee-paying students are able to apply to programs in which they believe they will get the greatest return on their investment. This is leading to the expansion of some programs and the retraction of others. For example, at TSU enrollments in law have increased rapidly while enrollments in applied maths, philosophy, history, philology, journalism, oriental studies, chemistry, and psychology have decreased. Enrollment in some other departments (e.g., maths and mechanics, physics, and geography, geology) has only been stable due to continued influx of state sponsored students. These demand-driven enrollment patterns are viewed by some as eroding the identity of TSU as a comprehensive university (Lorentzen, 1999).

A similar shift in enrollment patterns is also observed at the Georgia Technical University (GTU) where the most highest tuition departments -- social sciences, informatics, and transport -- also have the highest student enrollments. Similarly, at Georgia Agricultural University (GAU) fee- based enrollments in law, journalism, and business-related subjects are much higher than enrollments in GAU’s traditional agricultural subjects (e.g., agro-technology, forestry). In fact, current enrollments in economics at GAU now account for about a third of total enrollment (Lorentzen, 1999). This suggests that students are not just responding to cost but, presumably, also to perceived market demand. They appear to be willing to pay more for programs of study they believe will yield better career options.

In 1998, TSU generated more than 80% of its tuition revenue from 7 of its 18 departments (biology & medicine, history, western European languages, law, international law, economics, microeconomics & management). Law and economics alone accounted for 47% of the tuition revenue. Two-thirds of TSU’s students are enrolled in these subjects.

The government’s allocation of state scholarships by field of study does help maintain institutional capacity in the face of demand trends that would ignore some basic fields. Fields of study that do not attract many fee paying students include geography, philosophy, oriental studies, and journalism. Without public support, they are unlikely to survive. Hence, the continued allocation of state scholarships by field of study can help protect universities from potentially adverse market forces, even at it also allows them to ignore market forces that should be addressed.

A.11. Evaluation of student performance

Each university is responsible for determining the procedures for monitoring and evaluating student performance. In most universities, student learning is assessed through a combination of written tests and oral examinations. Only at GAU are the majority of exams primarily oral.

At TSU, examination records show that, depending on year of study, 9-31% of bachelors’ students achieve top scores while on average only 3-6% fail in at least one exam. At the masters level failures are practically non-existent. The distribution of scores differs by area of study. Performance curves are skewed toward a disproportionately high share of top scores in chemistry, history, oriental studies, law, and international law. Additionally, there are systematic differences between the performance of fee-paying and state-order students, with fee paying students generally earning lower scores. This may be a function of the admissions process. Presumably, the most academically able students qualified for state sponsorship. At the same time, TSU (like other universities) may admit less academically able students if they are able to pay (Lorentzen, 1999).

By contrast, at GAU grade inflation appears less widespread and more department-specific. Sixteen percent (16%) of students who took examinations in 1998 received the top mark. However, almost twice as many received a top score in economics while nearly 75% of those taking the examination in electricity received a bare passing grade or were failed. These variations in score distribution could be due to differences in student learning, quality of instruction, characteristics of the test, or factors in the admission process. However, GAU is concerned with these finding since the department generating the most revenue had the highest distribution of exam scores (Lorentzen, 1999).

A persistent problem in student evaluation procedures is the belief of many that scores are sometimes based on factors other than performance. A significant number, but less than half, of the respondents in a recent study of instructors and students acknowledged the influence of patronage and bribery on the assignment of scores. Where it does occur, it appears to be more pervasive among older staff, presumably because they used to doing it and because they have fewer opportunities to find supplemental income (Lorentzen, 1999). The inappropriate assignment of grades is of particular concern because it sends a message to the next generation of leaders now being educated at the universities that dishonest practices are an accepted way of doing business and that manipulation of the system is more important than personal merit or achievement.

A.12. Institutional accreditation and quality control

Quality control of Georgian higher education is supposed to operate through a four-part system. (1) Each university must be licensed by the MOE in order to operate as an educational institution. (2) The quality of the instructional staff is maintained by the Professors’ Council, which confers academic titles needed to secure employment as a professor or docent. (3) Attestation is an overall review of institutional activities. And, (4) accreditation is a review of an institution against pre-established objective standards of excellence. In practice, these mechanisms have not worked well and establishing an effective institutional accreditation process remains a MOE priority.

Licensing: The Education Law of 1999 established a legal framework and procedures for higher education quality control. The growth of private higher education necessitated amended regulations on the licensing of educational institutions. In late 1999, a Licensing Committee was established by he MOE and began work in early 2000. Licensing represented a one-time review of an institution to determine that it had adequate financial resources, curriculum, instructional staff and facilities. As mentioned earlier, a new licensing law (May 2002) is about to be implemented that would eliminate the requirement that private universities be licensed unless the MOE can develop and implement clear criteria and procedures for licensure with the first six months following adoption of the law.

Attestation: The Education Law authorized the MOE to inspect universities on a periodic basis to determine if they met the conditions envisioned in their licensure. This review was termed “attestation” and is viewed as separate from accreditation. During 2000, eight institutions were closed on the basis of attestation reviews. However, the process encountered substantial difficulties. The absence of clear criteria and standards for the review and the absence of procedures for implementing the decision of the review panel resulted in confusion and the system was discontinued.

Accreditation: The accreditation process also encountered serious implementation problems. Accredited institutions are allowed to award diplomas recognized by the State while unaccredited institutions can only issue their own institutional diplomas. However, the move was resisted by a number of leading institutions that chose to continue awarding only their own institutional diplomas. Again, the basic problem was that the Education Law establishing the accrediting process did not provide sufficient detail on how the law was to be implemented.

Government is now working to formulate a new quality assurance process. Institutions must still secure initial licensure from the MOE before they can operate. The assessment of the academic credentials of university instructional staff continues with some modification. A 1999 Presidential decree, supported by the MOE and the Rectors’ Council, vested the Professors’ Council with the authority to confer academic titles that are a prerequisite to employment as a university instructor. However, major efforts are underway to improve the university accreditation process.

The Ministry of Education and the rectors of many of the universities recognize the importance of having an effective accreditation process and are still attempting to create workable procedures. During 2001, the MOE and education leaders, with international assistance, developed guidelines for a new accreditation process. Key parliamentary committees and relevant ministries approved these guidelines in July 2001 and the first cycle of accreditation reviews was scheduled to occur between 2001-2007. This new accreditation process will be managed by the Accreditation Council and will involve a self-evaluation, a peer review and a 2-4 day site visit by an accreditation team that will then issue an accreditation judgment and an accreditation report. Under this system accreditation is voluntary, costs of the accreditation review are paid by the institution being reviewed, and accreditation, once awarded, is valid for six years. It is too early to determine the effectiveness of this new approach.

A.13. Facilities and equipment

Higher education institutions suffer from totally outdated equipment, laboratories, libraries, and lack of basic materials and supplies. Additionally, facilities at some public universities, particularly in rural areas, are underutilized. This is due largely to excessive allocations of space to non-instructional functions and under-utilization of specialized instructional space. This is costly, since the institutions still have to provide utilities (e.g., heating, electricity) and maintenance for these areas (World Bank, 2001).

A.14. Costs and financing of higher education

In 2001 Georgia allocated 3.8% of its central budget to education. Of that amount, 55% was allocated to higher education (Table 13). Overall, 2.1% of the total government budget was allocated to public higher education during 2001. This percentage is well below the 1998 level of 3.4% and slightly below the 1999 and 2000 levels (of 2.3% and 2.2%). The high percentage of the total central education budget going to higher education is largely because higher education is a central government expenditure while primary and secondary education are funded by local governments (though sometimes through transfers from central government).

The primary mechanism for funding higher education is through the allocation of the state order scholarships. When the money associated with those scholarships is transferred to the universities, it is in the form of a line item budget. Institutions are quite limited in their ability to deviate from the expenditure categories or amounts. The tuition these universities earn from fee paying students is under institutional control and provides important flexibility in allowing these universities to respond to changing circumstances.

A.14.1. Budget process: The funding provided to each institution by the Ministry of Finance (MOF) for state order students is based on a formula that incorporates the MOF estimates of the unit cost of instruction at each institution. The formula is based only on recurrent expenditures and does not include capital costs. Consequently, it is low relative to the actual cost of operating these universities. The tuition earned from fee paying students provides the additional funding needed by the universities to continue operation (see Gurgenidze, 2001).

The annual budget cycle for public universities begins with each university drafting a proposed budget. In principle, they enjoy considerable autonomy in this. Thus, an institution could decide to consolidate or close departments by reallocating resources internally. The drafts are reviewed by the Ministry of Finance (for funding limits), the Ministry of Economy in conjunction with other line ministries (for the determination of the number of state order scholarships to award), and the Ministry of Education. The line ministries that have a direct interest in these draft budgets, depending on the university involved, include Social Welfare, Labor and Employment, Culture, Agriculture and Food, Health, and the State Departments of Geodesy & Cartography and the State Department for Sports. Draft budgets are finalized in the President’s office. As part of this process, the Board of Rectors, an informal group of state university rectors operating in the role of consultants, reviews these requests. This group enjoys privileged access to the President and yields considerable power in fending off budget cuts or recommending tax increases. Following these deliberations the draft budget is sent to Parliament for debate. Once approved, the budget is disbursed on a quarterly basis to the universities. The budget for each institution is presented on a line-item basis from which the recipient institutions may diverge only on a short-term basis and only by a small percentage. Institutional budgets for selected universities are presented in Annex 6.

A.14.2. Expenditures: Nationally, overall expenditures on education amounted to 4.9% of GDP in 2000, of which 2.7% of GDP was out-of-pocket expenditures by households. While Georgia’s overall level of expenditure is comparable with that OECD levels (at 5.1% of GDP), the contribution of the public funds (at 2.2% of GDP) is well below the average for OECD countries and for the CIS region (4.6 % of GDP) (World Bank, 2001). However, in recent years, central government disbursements have fallen behind schedule due to either insufficient funds or weak managerial capacity. As a consequence, annual expenditures are frequently below approved budget levels in many institutions.

The universities are autonomous in personnel decisions. Funds permitting, it is up to each institution to reduce, maintain, or increase current staffing levels. However, there has been enormous reluctance on the part of university leaders to lay off or retire staff, even in areas of drastically diminished activity.

The effort of the universities to protect personnel has come at a high cost. Table 14 reports expenditures by category for six public universities and the change in those expenditures between 1997/98 and 2001/02. Over those five years, overall expenditures in five of these six universities increased, typically by 100-200%, but by as much as 630%. During that time, salaries have gone up dramatically, by 200-300% in most of the institutions, but by as much as 941% at one institution. At the same time, with notable exceptions, virtually all other expenditures have gone down.

The maintenance of current staffing levels in the face of little or no increase in state budget allocation means that universities either must tap private income to make up for the gap, increase the wage share of total expenditures, or delay salary payments by several months. Regardless of their strategy for coping with financial shortfalls, universities’ reluctance to align staff size with workload suggests that changes in public funding alone are unlikely to radically alter internal resource allocation. This constrains the government’s ability to streamline an overstaffed system and complicates efforts to revise the state order system.

A.14.3. Unit costs: A 1999 study found that unit cost estimates ranged from Lari 200 to Lari 6,000 (Lorentzen, 1999). Unit cost data from 2001/02 provided by the State Department of Statistics shows less variation, with per student expenditures ranging from 75 to 1246 lari per year (Table 15). A calculation based on dividing the total reported expenditures as reported by the Ministry of Finance by the 2001/02 enrollment as reported by the MOE indicates unit costs range between 394-2710 lari per year (Table 16). Calculations based on data collected directly from selected institutions shows a per student cost ranging from 270-2774 lari per year (Table 17). These expenditure data differ from the expenditure data in Table 16 in that the institutional data was for the 2001 school year while data in Table 16 was for a full fiscal year. The common element across all these efforts to estimate per student cost is that wide variation across institution.

Of particular interest is the comparison of expenditure per student for state sponsored and fee paying students at public universities (Table 15). The unit cost of fee paying students is generally, but not always, higher. It is consistently higher across the larger universities regarded as higher quality institutions (bolded in Table 15). This general pattern (of higher unit costs for fee paying students) indicates universities are receiving more income for fee paying (than state sponsored) student and suggests that fee paying students are subsidizing state supported students.

This issue is complicated, however, since, as Lorentzen (1999) pointed out, fee-paying students use publicly funded services, for example, by sharing classrooms with state sponsored students. Consequently, public expenditures may underwrite part of the private university income. However, as a decreasing share of the state funds to universities are spent on operations and maintenance and the disparities between the unit expenditures for state and fee paying students increases, it seems more likely that, in most institutions, fee paying students are subsidizing state sponsored students.

Per staff expenditures range from 1594 to 6809 lari per year, based on Ministry of Finance data (Table 16). However, this variation in per staff expenditures reflects the considerable variation in the size of the research (and other non-instructional) staff employed at some institutions.

One reason for such variation in per student expenditures was that university administrators calculated unit cost on an institution-wide basis, arrived at by dividing current total expenditures by the total number of students (Lorentzen, 1999). This approach failed to differentiate between high and low cost courses of study and masks implicit internal transfers. Some institution may have chosen to subsidize low enrollment courses that were judged important to offer with revenue from higher enrollment courses.

The Education Law limits student fees in public and private universities to the per student expenditure for state order students. In practice, universities charge fee paying students a tuition rate that is higher than the amount they receive for state order students. One consequence of this practice is that universities are reluctant to report unit cost data, from a concern that it would expose tuition levels above those allowed by the law.

A.14.4. Financing of higher education: The main sources of funding for the education sector include public sources (i.e., the central and local budgets) and non-budgetary resources. The main sources of non-budgetary revenue include (i) formal student fees in upper secondary education (grades 10-11) and in the tuition track programs of specialized secondary and higher education institutions; and (ii) parental contributions (World Bank, 2001).

Budgetary resources: Since 1996, Georgia has annually allocated about 11-12% of it national budget to education (which corresponds to about 2% of GDP). Of that, 20.6% is allocated to higher education (1999 data) (Table 18). Overall public spending on education as a share of both GDP and total public spending is one of the lowest in the CIS region. [By comparison, OECD countries spent 5.6% of GDP and 14% of total public budget on education.]

The central budget is primarily used to finance national level education institutions, such as boarding schools, technical schools, and higher education institutions. Local governments (58 regions, 2 autonomous republics and the city of Tbilisi) have the main responsibility for the financing of preschools and general schools. In 2000, nearly 83% of the total local budget was allocated for general education (grades 1-11); 16% for preschools and only 1% for vocational and higher education (Table 19). However, about 67% of the central budget was allocated for higher education.

Non-budgetary resources: The funding of education in Georgia has become increasingly privatized during the over the last ten years. Each institution can set its own fee structure and comprehensive data on fees is not centrally available. However, a sampling of institutions reflects variation in practice. Table 20 reports tuition fees charged during the 2001/02 school year in selected programs across four institutions. These fees ranges between 330 and 2200 lari per year. There is variation across institutions, across programs within institutions, and across year of study. For example, At TSU, fees tend to be higher in the first year of undergraduate and the last year of graduate study. During the 2001-2002 academic year, only two of 21 programs at Tbilisi State University collected revenues that exceeded program costs. At GTU, fees vary across departments according to student demand for admission. Departments most in demand (e.g., social sciences and informatics) command a multiple of the tuition in lower demand departments (e.g., metallurgy, mining).

There is no reliable consolidated accounting of the sources of and uses of education funds. However, current estimates are that approximately 56% of total university revenues come from student fees, 41% from the state budget, and the remaining 3% from other sources. By way of comparison, private funding in tertiary education accounted for approximately 23% of total spending in OECD countries. (OECD, 2000). It is important to note that, while 56% of the revenue comes from student fees, in the 2000-2001 academic year, fee-paying students accounted for only 26% of enrollments. This means that fee paying students provide a considerable subsidy for state sponsored students. This is reflected in Table 21 which shows revenue by source for selected institutions for 2001.

For the individual students involved, the university fees represent a major expenditure. One perspective in which to evaluate the burden posed by these fees is in terms of typical incomes. The State Department of Statistics estimates that, in 2001, average family income is 206 lari per month (2412 lari per year) and that average family expenditures amount to 287 lari per month (3444 lari per year). Tuition for many of the programs in Table 20 would amount to half a family’s annual income.

Averages can mask even more severe problems, as in the case of teachers. Secondary school teachers in Georgia, who presumably need to have a bachelors level education to be considered qualified, earn between 32-70 lari per month (384-840 lari per year). Annual tuition at most public universities exceeds a full year’s salary for even the highest paid secondary school teacher (Table 20).

Informal payments: Both qualitative reports and household surveys suggest that informal payments account for a significant share of education funding, especially in higher education (see, Lorentzen, 1999; Sharari, 1999; Sealy, 1999; SSD, 2001). Informal payments are defined as payments by parents (or students) for educational services that are not explicit or publicly mandated. They are difficult to estimate because they are unofficial, often in the form of gifts, contributions, and bribes. They can be (a) voluntary payments for maintenance, equipment and materials or bribes to be admitted into a specific program or institutions or to obtain higher grades in examinations or (b) involuntary payments, when requested by teaching staff or administrators. In both cases, they highlight problems with transparency and the probity of official conduct in the education sector.

Given the informal nature of these payments and the lack of trustworthy data, it is difficult to examine the nature, magnitude, or impact of these informal payments on the education sector. According to the household survey, it was estimated that unofficial fees accounted for approximately GEL 3.2 million or 1.8% of the estimated household education spending, which represents 3.1% of estimated public institutional spending (World Bank, 2001). A pervasive form of informal payment has been for private tutoring. Private tutoring has become a necessary complement to attend higher education, especially in selective public institutions and programs. The prevalence of private tutoring is partly related to a concern over the poor quality of education in general schools and partly related to teachers’ interest to obtain supplementary income.

A.15. Donor support of higher education

Many countries sponsor individual university partnership or twinning arrangements with specific Georgian universities. The European Union sponsors a TACIS program and the SOROS foundation has sponsored student and faculty exchange programs. However, at the strategic and policy levels, international assistance to higher education in Georgia has been limited largely to the participation of international agency representatives in Georgian government task forces and commissions looking at higher education reform.

PART B: Main Issues Confronting Georgian Higher Education

B. 1. Staffing levels and deployment of personnel

Educators and government officials recognize that personnel costs are the single greatest expenditure at all Georgian universities. At the same time, virtually all analyses of the Georgia higher education system have identified over-staffing and misallocation of personnel at state universities as a key source of internal inefficiency. The number of academic and research personnel could be reduced substantially without negatively affecting the quality of instruction. Many argue that reducing excess personnel could free up resources that could then be reinvested in ways that would improve the quality of higher education. Three aspects of the issue need to be considered: (a) low student:teacher ratios, (b) the consolidation of over-specialized programs, and (c) the integration of teaching and research staff. Each of these are discussed below.

(a) Low student:teacher ratios in public universities has been identified as a major source of internal inefficiency in virtually every analysis of the Georgia higher education system conducted in the last five years. Any strategy for reducing personnel without reducing the quality of instruction offers an enormous opportunity to increase the efficiency of the system. The question now facing Georgia is not whether universities are overstaffed (that has been well established), but why that condition is allowed to continue and what can be done to address those underlying issues.

Three underlying factors contribute to the current situation. First, the formula used by the Ministry of Finance for determining the value of the state orders allocated to each university is based, in part, on the number of staff and overall staff cost at each university. Institutions have an incentive to maintain high staffing levels.

Second, even though state salaries are low, maintaining a formal title is necessary for academic staff to maintain access to other income generating activities, such as private tutoring and teaching in fee-based programs. Maintaining a formal title is also necessary for continued access to some fringe benefits and social services. If it were possible to provide these advantages without the need to maintain employment, universities might be more willing to reduce staff size.

Third, staff size could be meaningfully reduced through retirement, but pensions are so low that staff resist this option. For example, at GTU, a third of the teaching staff are over 60. Those over sixty account for more than 40% in metallurgy, informatics, and the general chairs. If pensions could guarantee a decent retirement income, it might be possible to solve a large part of the problem of overstaffing.

Consequently, both the institutions and the individual staff members have incentives to maintain a high staffing levels. Creating incentives, or at least reducing the costs, of retrenchment would open the way for a series of other needed reforms. For example, universities might be more willing to consolidate narrowly specialized programs and institutions, since protecting current staff is one of the impediments to consolidation. Similarly, the political pressure to maintain state order scholarships stems, in large part, from institutions’ need for funds to maintain more staff than they realistically need.

One policy option would be to (a) institute an attractive severance package (a “golden handshake”) in which those willing to leave university employment would get sufficient funds to offset their loss of benefits. Since the age profile of university staff suggests many are near retirement, another policy option would be to institute an attractive early retirement program that would operate much the same way as the severance package. While government would incur a large up-front cost, it provides some long-term cost savings to the universities. For such a program to succeed, government would need to require that positions at the universities, once empty, not be refilled.

A second policy option would be to assure universities that monies saved through downsizing (either due to severance or retirement) would return to the universities for them to invest in ways that would increase institutional quality. This might take the form of increasing the salary of instructor with stronger academic credential, upgrading laboratories, or increasing the availability of instructional materials. A similar initiative is about to be tried at the secondary level in Georgia and, over time, my provide a useful model.

While it will be important to create incentives for both institutions and staff members to reduce employment levels universities, these strategies are, to some extent, contradictory. Both make demands on the funds that would presumably be saved by downsizing university staff. Only through the infusion of additional funds can both options be undertaken. This will either require new government investment in higher education or the use of international funds.

However, raising the student:teacher ratio needs to be undertaken as part of a larger effort to rationalize the staffing levels at public universities. Two additional factors contribute to large staff size: (a) the large number of highly specialized programs and (b) the large number of research staff currently being supported within the public universities.

(b) Consolidation of specialized programs of study: As described earlier, many universities maintain a large number of highly specialized departments. This contributes to inefficiency in two ways. First, students of these narrow program areas do not necessarily receive a sufficiently broad academic preparation to adapt to the changing technological and labor market conditions that characterize the current labor market. Second, there is often a duplication of teaching staff, space, and equipment that contributes to high unit costs. Reducing the number of specializations opens the way for reducing staff size and improving the allocation of space and instructional resources.

Resistance to consolidation has largely centered on two issues: (a) a concern about what would happen to staff who are no longer needed and (b) a desire to protect the universities’ capacity to offer courses in specialization areas that might again be needed. Attractive severance and retirement incentive programs might help reduce concern about ensuring the welfare of those who leave university employment.

The concern for protecting capacities needs to be reconsidered in light of Georgia’s move toward a free market economy. Some combination of three possibilities might be considered: (a) Specializations that currently are maintained as separate academic departments could still be consolidated into broader departmental groupings. The capacity for the sub-specializations could be preserved by retaining a few of the top scholars in each of those areas. (2) Selected universities could be designated to continue specific specializations. Those capacities could then be discontinued at the other universities. (3) Some specializations need not be maintained in the university to be available in the future. Qualified personnel can be hired in the future, should a specialization need to be re-activated.

(c) Integration of teaching and research staff: Up to 25% of the staff at some pubic universities are assigned to research institutes and centers within their universities. For the most part, these research staff have no regular teaching assignments, though many teach on a part-time basis to supplement their income. The government budget provides a salary for these staff but does not cover the actual costs of conducting research studies. The universities must secure those funds through special grants or from private sources. It is probable that many (perhaps most) of these research positions could be eliminated without any noticeable reduction in instructional quality or research productivity.

Government and university officials recognize that the research staff are seriously under- employed and represent a major drain on the university budget. At the same time, there is concern about the future of these individuals and a reluctance on the part of some to see the university lose its research capacity, however under-utilized. The integration of teaching and research staff has already begun in some institutions but, overall, the process is just beginning. A combination of political commitment to reduce university costs in combination with viable severance and retirement programs will be needed before this integration can be fully accomplished.

It is unlikely that meaningful improvements in higher education will not be accomplished until university and government leaders develop the necessary consensus, strategies, and political will to reduce staffing levels and undertake the restructuring associated with those staffing reductions.

B.2. Ensuring the integrity of decisions about university admissions and subsequent student performance

(a) Integrity in admissions decisions. The widespread abuse in the current system for administering and utilizing university entrance examinations in determining admissions and state order scholarships poses two problems. First, due to the widespread manipulation of test scores for personal gain, test scores are not viewed as a valid indicator basis of student merit. The use of test scores does not necessarily lead to appropriate admissions decisions. Secondly, the abuse in the testing system undermines public confidence in higher education and send a message to students that corruption is necessary and condoned. There is a fear that this message will be carried into other aspects of Georgia life.

One strategy for overcoming this problem is to remove the admissions testing function from individual universities and create one nationwide university admissions test administered by a central agency. This strategy has been used successfully in Azerbaijan. However, this system only works to the extent that the integrity of the central testing organization is assured and test information is transparent. Such a move is likely to be resisted by those who benefit from the current system. Removing the admissions testing function from individual universities will reduce the income stream of those who benefit financially from score manipulation. Consequently, it is unlikely that leadership in making this change will come from the institutions themselves. Rather, it will need to be championed by those at the most senior levels of government.

(b) Integrity in assessing student performance. The prevalence of patronage and bribery in influencing the assignment of student scores is widely recognized. These practices distort the information available to employers about student performance. This, in turn, leads to misallocation of personnel and undercuts employer (and public) confidence in university credentials. Educators and government officials in Georgia are also concerned that student success based on patronage and bribery will carry into graduates’ behavior in the workplace.

These forms of corruption have flourished, in large part, from the need of university staff to supplement their incomes. While raising salaries and improving conditions of employment may help, international experience suggests that such remedies alone are unlikely to reduce these practices. The influence of patronage and bribery will only be reduced when government and university officials decide to no longer tolerate these practices and take decisive action to punish those who engage in them. The solution is largely a matter of political will. Until that is will is achieved, the credibility and efficiency of higher education in Georgia will suffer.

B.3. Deteriorating quality of higher education

Three factors seem to contribute to the deteriorating quality of higher education in Georgia: (a) the declining prior preparation of entering students, (b) the drop in state support of higher education, and (c) the allocation of funds that are available in ways that do not promote quality.

(a) Declining prior preparation of entering students: Considerable evidence suggests that the quality of instruction in the secondary school “feeder system” supplying future waves of university students has dropped sharply due to shortages of basic teaching materials, poor teacher training, low teacher salaries, high teacher turnover, and poor school maintenance. Universities have already started to suffer from this pipeline effect as the erosion in the entering knowledge, skills and abilities of incoming students forces universities to offer compensatory education programs or to adjust its own curriculum to accommodate students’ lack of prerequisite knowledge.

During 2001, 55% of central government funding for education was allocated to higher education. One way to help improve the quality of higher education is for government to invest more heavily in general education, so that entering students are better prepared to handle the demands of the university.

(b) The decline in state support of higher education: University educators point to the sharp decline in state funds for higher education as the cause of the declining quality. While the share of the national budget allocated to education is low by international standards, it is unlikely that seeking a higher share of public money for higher education will be (or even should be) successful. Government has limited fiscal capacity to increase its allocation and there are competing priorities for funds that do become available. Specifically, there is a compelling argument that if the national budget was to increase, those funds would be more appropriately directed to primary and secondary education. This argument is fueled by the inaction of higher education leaders to implement widely advocated actions to increase efficiency.

(c) Inefficient allocation of resources: While government has decreased its contribution to higher education, universities have resisted actions they might have taken to reallocate and better utilize the resources that are available to them. Given university resistance to changing staffing levels, reworking staffing structures, or implementing more accountability systems, it is unclear how increased state subsidies to higher education would result in improve quality of instruction or institutional operation.

B.4. Weak alignment of higher education with labor market needs

The greatest source of external inefficiency in higher education occurs when the instruction offered at universities is not aligned with the needs of employers (Chapman and Austin, 2002). This occurs (a) when external economic conditions are changing rapidly, (b) when employers themselves are uncertain about or unable to articulate the knowledge and skills they need in employees, and (c) when university staff are out of touch with current employer needs. Georgia faces all three conditions.

Considerable evidence suggests that the curriculum and administrative procedures of Georgian universities have not kept pace with the country’s move from central planning toward a free market economy. As a result, external efficiency of higher education in Georgia is low. Four factors contribute to this weak alignment: (a) the continued use of state order scholarships as a means of providing state subsidies for public universities. (b) weak alignment of university curricula and labor market needs, (c) over-specialization of academic departments, and (d) inadequate student access to labor marker information.

(a) State order scholarships: The current system of state sponsored scholarships is problematic for three reasons: (1) The MOEC lacks information on actual labor market demand on which to base its allocation of scholarships. Lacking these data, allocations are largely arbitrary and are often based on an extension of allocations made in the previous year. (2) The actual labor market absorption of state sponsored graduates, whether in their field of study or in another profession, is not monitored or evaluated. And, (3) the government is in a weak bargaining position with the universities when trying to reduce state sponsored scholarships. Evidence from the budget cycle suggests that especially the rectors of the universities based in Tbilisi prevail over government ministries intent on reducing outlays before submitting the draft budget to parliament for consideration. The government also has little control over the allocation of state scholarships in universities outside Tbilisi that are co-financed by the local authorities. Hence, despite a fairly high degree of formal centralization in the system, effective control over outlays rests only partially with the government (see Melikidze, 1998, 51-3). Together, these factors raise serious questions about the efficiency of the current method of allocating state scholarships by field of study.

University administrators argue that the university entrance examination is necessary because of the variable quality of secondary schools. However, these examinations have been a source of controversy and abuse. They are intended to ensure that access to higher education and to state scholarships is based on merit and ability. However, government officials and educators recognize that non-merit factors (bribes, family influence) often play an important factor in admission and scholarship decisions. Given the prevalence of non-merit factors in admissions decisions, it is unlikely that admissions test scores cannot be accepted as valid indicators of student ability. Earlier studies suggest that high ability and more academically average can generally earn university admission without bribery (though average students may still offer bribes to improve their chances) (Lorentzen, 1999). This means that, for all but the top candidates, students end up paying for their education either though bribery (to secure a state scholarship) or, more directly, by paying tuition.

Student surveys and interviews with stakeholders and teaching staff offer anecdotal evidence on the sums involved. Bribes range from less than $100 to allegedly more than $20,000 and vary by institution and by department. One explanation for the prevalence of this practice is that teaching staff accept bribes to compensate for insufficient or unpaid salaries. However, it is unlikely that a salary increase or timely salary payment would do away with this problem. The practice is unlikely to change as long as bribery is tolerated by the university leadership. Moreover, as long as there is no administrative division between staff who collect the funds and those who record and balance accounts, it will remain difficult to detect (Lorentzen, 1999). An impediment to a more careful analysis of student selection procedures is that most universities do not maintain annual statistical records about student test performance or the admissions process (Gurgenidze, 2001).

The government recognizes that the allocation of state order scholarships has no demonstrable relationship to labor market demand. Yet government, under considerable pressure from the universities, continues the process as a means of providing state subsidy to public universities. While continued state subsidy of public education might be appropriate, the linkage of these subsidies to meaningless labor force estimates serves to distort the internal allocation of resources within the institution (an issue of internal efficiency) and distort the production of graduates by field of study (an issue of external efficiency).

There are strong pressures to maintain the state order system, despite its weaknesses. First, smaller universities are concerned that if the state order system were to be abolished in favor of a direct state subsidy the public universities, they would loose resources to the larger, more politically connected universities. They believe the systems that underpin the allocation of state order scholarships put them less at a disadvantage. Second, merit-based scholarships are an important symbol of the value that Georgian society places on higher education. Allocating state funds in other ways would fail to capture the symbolic value of the state order system. Third, the assignment of state order scholarships operates as an important source of patronage for some senior university personnel. Without the ability to assign state order scholarships, the influence (and possibly the income stream) of some university officials would diminish.

One possibility to improve the allocation of state funds to higher education would be to drop the state order system and shift to direct state subsidies of public universities. While this approach might lose some of the symbolism of the state order scholarships, it offers other compensating benefits. One advantage would increase the transparency in the utilization of state funds and reduce the bookkeeping burden on universities. They would no longer have to keep separate accounts of how money is received (state order scholarships) and how money is spent.

(b) Curriculum - labor market alignment: The university curriculum in Georgia has tended to emphasize theory and knowledge acquisition rather than practical skills. While both are necessary, universities need to find a more appropriate balance. This will require a major shift in the attitudes and teaching methods of many university staff, many of whom are using outdates course content and pedagogical practices. There is evidence such changes are needed. A 1988 study conducted by the State Employment Service found that most employers (92.5%) were dissatisfied with the qualifications and skills of employees. In additions to skill deficits, managers complain of attitude problems. Employers cited the need for flexibility, independence, diligence, the ability to work in teams, honesty, and an understanding of how a market-economy works. (Lorentzen,1999). On the other hand, about 28.5% of employees were not happy with their jobs and wages (Ghlonti, 2001).

A key dimension of this problem is that many university instructors lack information about the knowledge, skills and abilities needed by their graduates in the labor market. Only as such information available will university staff be able to design instruction that is relevant to the workplace. However, at present, there are few incentives for instructors to change their teaching practice and few penalties for not changing.

One way to remedy this situation is through tracers studies that assess the experience of recent graduates entering the labor force and identify implications for the preparation of further graduates. Another way is to create advisory groups and other mechanisms through which employers can interact directly with university personnel.

There are essentially three types of studies that might be undertaken. Longitudinal studies follow one cohort from the time of graduation through several years of employment. The goal is to identify ways in which their university education could have better prepared them to find and succeed in a job. The down-side of this approach is that it takes several years to complete. A faster version is a cross-sectional study in which graduates from an earlier year (perhaps five years ago) are contacted and interviewed to reconstruct the issues they encountered in securing and succeeding in their employment. A final version is an employer study, in which employers of previous graduates are interviewed to determine ways their employees might have been better prepared for their work. A series of studies that combined a survey of graduates with employer interviews would provide a information that could inform curriculum redesign and support the development of better career advisement.

(c) Over-specialization: As discussed earlier, universities are still organized around a large number of highly specialized departments and programs of study. However, many Georgian educators and government officials recognize that, in a rapidly changing free market economy, university graduates are better served by having a more generalist emphasis, at least during the first phase of higher education. Government has already made progress in creating the legal framework that encourages a more generalist focus at the bachelors degree level. The 1997 Law on Education introduced the four-year bachelors degree followed by a two-year masters degree. The rationale for this shift was that the generalist preparation provided bachelors graduates with more job mobility at a time that the economy was in rapid transition.

However, this shift has not yet been completed accepted. Surveys of teaching staff and interviews with university officials and employers indicate that the undergraduate stream is not always held in high regard. First-tier graduates appear to have more problems than second-tier graduates in finding a job in their profession. One possibility is that the introduction of four- plus-two merely split the previous five-year, single-track program without sufficient modifications to the contents of the curriculum (Lorentzen, 1999).

The consolidation of specialized departments within universities may help promote greater acceptance of this shift among university personnel. Universities may also need to more aggressively educate employers about the changes underway in higher education and ways the employers may benefit from those changes.

(d) Student access to labor market information: External efficiency is improved when students have the information necessary to make well informed decisions about career options and the courses of study that lead to them. Relevant curriculum and pedagogy are only useful to students if they know when and where they are available. At present, the secondary schools and universities of Georgia lack effective systems for collecting and sharing this type of information. As a consequence, students often lack information on the career ladders associated with different jobs, (e.g., what entry level and intermediate jobs lead to the position they eventually want to hold), what education programs prepare them for those jobs; and, what universities offer those programs.

The problem does not rest entirely with the university. Over the last 2-3 years, Georgia has experiences a chaotic labor market, the result of both structural changes in the economy and weak labor market regulating mechanisms (Ghlonti, 2001; World Bank, 2001). Moreover, employers, while expressing dissatisfaction with the preparation of the graduates they receive, are unable to define the skill profile they seek. In some cases, unsatisfactory job performance is not necessarily due to the quality of education, but to inappropriate hiring decisions.

(e) Student mobility across departments and institutions: At present, it is difficult (often impossible) for students to transfer across departments or across universities. This results in external inefficiencies, as students who discover they have no interest or no aptitude for an area of study (and eventual employment) are unable to reposition themselves. Some universities are shifting to a credit-hour system, a first step in improving this type of mobility. However, this effort is just beginning.

One impediment to student transfer has been concern that state order scholarships could not be transferred across institutions. However, this issue would be minimized by shifting from state order scholarships to direct institutional funding. Institutions would be assured of their level of state subsidy separate from individual student decisions to change programs or institutions.

B.5. Inequitable access to higher education

The differences in enrollment rates between the poor and non-poor in university enrollments is large and growing, principally due to the increased emphasis on cost sharing that operates to discourage or exclude the less affluent. There are also urban/rural differences in university access, with students from rural areas least likely to have access to higher education (World Bank, 2001). Both the direct cost and the opportunity cost of attending higher education have increased dramatically for the poor, especially for those in rural areas. As a result, it is likely that fewer poor children can continue to higher education.

Children from poor families are caught in a convergence of disadvantage. They often have less access to quality secondary education, to private tutoring, and to selective higher education, especially state sponsored higher education. As a result, they enter the labor force as less qualified workers. This has serious long-term implications for Georgia’s economic development.

The most direct means of increasing the access of children from poor families to higher education are interventions that (a) moderate the impact of cost sharing, such as need-based state scholarships and student loan programs, (b) reduce the importance of private tutoring, and (c) create opportunities for compensatory education.

(a) Moderating the impact of cost sharing: Government’s move toward a policy of cost sharing, in which students and their families pay part of the cost of higher education, is represented by the admission of fee paying students in public universities and by the creation of private universities funded entirely by student tuition. However, cost sharing limits the access of students from poor family backgrounds unless special provisions are enacted to protect these students. As Georgia continues these policies of cost sharing, government needs to consider measures to protect and assure the access of low-income students. Two means to protect the access of low-income students are (a) to shift state scholarships from merit-based to need-based awards and (b) to provide a loan program though which low income students can access funds to cover the costs of tuition.

Need-based state scholarships: At present, state order scholarships are awarded exclusively on the basis of merit, as determined by student scores on university entrance examinations. This results in children of affluent families receiving financial assistance their families may not truly need while talented students from poor families are precluded from a university education. One possibility is that Georgia move to system in which state scholarships are awarded on a combination of merit and family financial need. Students could still be ranked by merit, but only students whose families could demonstrate financial need would receive state funds. The premise of this approach is that high ability students with adequate family financial resources will attend the university anyway, leaving state funds for use with high ability students who would otherwise be lost to the higher education system or would be forced to lower quality options.

Student loan programs: Student loan program allows students to spread the current costs of higher education over future years. In a student loan program, some lender (government, university, or private lender) pays the costs of higher education in the present with the understanding that they will be repaid by the student with interest in the future (Johnstone, 2001). Advocates of student loan programs argue that (a) loans shift the cost to those who most directly benefit from the additional education, (b) loans motivate students to be more careful in their choice of higher education programs, and (c) students who borrow money are more likely to complete their studies as quickly (Johnstone, 2001; Johnstone and Shoff-Mehta, 2001; Vossensteyn, 2001).

There are four ways that the government can participate in a student loan program: (1) Government can either serve as the lender or can guarantee loans provided by private lenders. (2) Government can subsidize the rate of interest paid by the student borrower. (3) Government can absorb some of the costs of administering the loan program, for example, by determining student eligibility or collecting repayments. Or, (4) government can use governmental systems for collecting loans, for example by collecting loan repayments along with tax collection (Johnstone, 2001).

Georgia would need to overcome several problems to implement an effective loan system. The willingness of private capital sources to offer such a program depends on the value of the student loan and the certainty of repayment. This means that government may have to subsidize the rate of interest and guarantee repayment, both of which can entail substantial public costs that Government may have difficulty meeting. Alternatively, government itself can provide the loan capital, but this use of capital competes with other public priorities for access to this capital.

International experience indicates that such student loan schemes are complicated to administer and have an uneven history of success (Johnson, 2001). While it is not yet clear whether a student loan program would be appropriate for Georgia, it is an option that should be considered as a means of ensuring access for low income students who would otherwise be unable to pay the fees now being charged at both public and private institutions.

Georgia would also need to establish some mechanism for assessing family financial need, as a means of ensuring that only low income families had access to state scholarships and subsidized loans. This would require family financial disclosure that some families might find objectionable. Beyond that, Georgia would need to establish a mechanism for tracking graduates and collecting loan repayments.

(b) Use of tutors: Private tutoring has become necessary for students who want admission to a selective program or university, especially a selective public university. The prevalence of private tutoring is partly a response to the poor quality of education in primary and secondary schools and partly related to teachers’ interest in obtaining supplementary income. (World Bank, 2001; see also Bray, 1999)

The poor are at a clear disadvantage in their access to private tutoring. Approximately 34% of non-poor students (aged 7-14) in urban areas receive private lessons, whereas only 20% of poor students receive such lessons. In rural areas, about 25% of females and 20% of males among the non-poor receive private lessons, while only 13% of female and 7% of males receive private tutoring. The poor have less ability to pay for private lessons and are the ones most affected by the lower quality of primary and secondary and, consequently, access to higher education (World Bank, 2001, p. 40). Between one thirds and two thirds of the respondents used tutors to help them prepare for university entrance examinations. In some cases these preparations were to improve contend knowledge; in other cases the use of a tutor who was on the examination board was used as a means to gain a favorable assessment of the candidate (Lorentzen,1999). The pervasiveness of private tutoring, the economic issues underlying the practice, and the complexity of reason that families engage tutors makes this a particularly difficult problem to address. Efforts to address it need to recognize that private tutoring is not, itself, the root problem. Rather, it is a symptom of a larger issue concerning the quality of public education and salaries of teachers (Bray, 2001). Only as those issues are resolved can the pervasive use of tutoring be addressed.

(c) Compensatory programs: Inequities operate in subtle ways. Children of the poorest families are caught in a convergence of disadvantage. The school performance is influenced by their inability to afford textbooks, materials and supplies, school meals, private tutoring, or informal payments to secure special consideration. The cumulative effect of these factors lowers the probability they will complete secondary school and continue on to higher education. This represents a serious cost to Georgia as talented youth are denied access to higher education due to the economic circumstances of their family.

Over time, it may be appropriate to create special compensatory programs for talented students who lack the financial resources to allow them perform at a level that would earn them admission to higher education without supplemental education. This can be accomplished through special entry programs created and operated by universities, or as special programs attached to secondary schools.

B.6. Stronger systems for administration and management

Government has made important progress in revising the legal and policy framework governing higher education. However, the value of these laws and policies are often determined by the quality of their implementation. The efficient use of resources to improve higher education in Georgia will require that educators and government officials have access to the data they need to monitor the implementation and assess the overall impact of reform efforts. At present, the quality and availability of data for this purpose is limited.

(a) Licensure, accreditation and quality control: While the rapid growth of the private sector has reduced the education sector’s burden on the public budget, it has raised questions about the quality of education provided by private institutions (World Bank, 2001). The system for both licensing private universities and accrediting both public and private institutions need to be strengthened in ways that ensure its effectiveness and legitimacy. This will require more assertive efforts on the part of both the Ministry of Education and the institutions themselves. The new national accreditation policy (May 2002) would let institutional avoid licensure if the MOE is unable to formulate clear accreditation criteria and procedures in a reasonable amount of time. It is incumbent on the MOE to meet its deadlines. Similarly, criteria for accreditation need to be rigorous, application of those criteria, need to be consistent, and institutions need to have a incentive to take the accreditation process seriously. One approach is to allow tax breaks to both public and private universities that earn accreditation.

(b) Management information system: At present, education data collected from different sources do not agree, often by substantial amounts. There are substantial discrepancies in the revenue, expenditure, staff deployment, and student data from the Ministry of Education, the Ministry of Finance, and from the institutions themselves. These discrepancies have three consequences: (1) It makes realistic planning and resources allocation difficult. (2) It undermines stakeholders’ confidence in the administration of the higher education system. And, (3) opponents of particular policies can use discrepancies to discredit policies that may have merit.

An important step in strengthening the management capacity of the higher education sector would be the development of campus-based and government-wide higher education management information systems (EMIS). While the State Statitics Office provides some of this function, their efforts are constrained by two factors. First, the universities lack shared definitions for key indicators of university and system level efficiency. For example, universities use different definitions in their calculation of student:teacher ratios, full-time equivalent staff members, and unit costs. This makes meaningful cross-institutional comparisons difficult or impossible. A systematic effort to develop common definitions and ways to calculate key indicators would be an important contribution to improving the efficiency of the higher education system. A second constraint is the availability of and access to the information that is regularly collected.

The State Statistics Office does regularly collect data across a number of indicators of system efficiency. By law, however, the Statistics Office can only release aggregate data. While there are occasions when individual institutional data needs to be protected, the present law often operates to unnecessarily constrain important and necessary analysis. Cross-institutional comparisons provide a means for university administrators, ministry officials, and other stakeholders to monitor the impact of policy on practice, identify particularly effective practices, and assess institutional efficiency.

(c) Aggressive law enforcement: Recent reviews of the higher education system in Georgia suggest that the present Education Law provides few incentives for efficiency in spending units and fails to require strong accountability in the production of education services. Until government demonstrates that rules are to be followed, it will be difficult to introduce measures to improve quality or efficiency of higher education programs.

(d) Informal nature of university level management: At many state universities, decision making at some universities tends to be highly centralized with the rector. Academic faculty have only limited involvement in academic decisions and academic departments have little financial autonomy (Lorentzen, 1999). However, if some of the recommendations for consolidating departments, merging research and teaching staff, and increasing student:teacher ratios are to be successful, personnel at levels below the rector or senior staff of the university will need to be empowered to make decisions that are currently centralized with the rector and senior staff.

(e) Training in higher education administration: Many mid and senior level university officials lack formal training in higher education management and administration. Consequently, many are not yet familiar with techniques for accounting, student tracking, facilities management, and program monitoring that are widely used internationally. B.7. Clarify spending priorities as a means of adapting to reduced funds for higher education

Despite some recent improvement on the level of public spending on education, Georgia still has one of the lowest in the region. Relative to other countries, the education sector continues to be under-funded from the public budget, especially given the high level of enrollments in primary and secondary education. Higher education accounts for slightly over one-half of total education spending in the country and the per-student costs of higher education are considerably higher than in primary, secondary, or vocational education. Given competing priorities for new public funds, it is likely that higher education will need to demonstrate greater efficiency in the funds currently allocated to this sector.

(a) Clarify higher education spending priorities: Georgia has not yet established clear education priorities as a way of adjusting to the decline in public funds. Rather, government is coping with the fiscal crisis through across-the-board cuts in education spending and temporary measures such as sharp drops in teachers’ wages relative to other wages, delays in paying energy bills and teacher wages, deferred maintenance, reduced resources for basic education materials and supplies (World Bank, 2001).

(b) Create incentive for increased institutional efficiency. One approach, discussed earlier, is to allow public institutions to keep the funds they save through reducing staff size (while the ensuring the social protection of those who leave university employment). Another approach is to provide tax breaks for both public and private universities that can maintain high instructional quality, as indicated through periodic accreditations reviews. At the same time, government might link continued state funding of public universities to improved efficiencies at the institutional level by tying state allocations to each university to their progress in reducing staffing levels and consolidating over-specialized departments.

(c) Forward budgeting: Central ministry allocations to the universities tend to vary in amount and timing in ways that constrain efficient management at the campus level. Budget allocations are highly specified, leaving little flexibility or discretion to university administrators for how funds are used. This degree of micro-management of the universities by the Ministry of Finance is unlikely to foster efficiency, and may well prevent introduction of efficiency improvements.

Part C: Recommendations

The previous analysis provides a basis for 12 recommendations. These recommendations are intended is to encourage discussion about policies and strategies for strengthening higher education in Georgia and the role that international agencies can play in that process.

Recommendation 1: Discontinue state order scholarships. Shift to a system of directly subsidizing state universities based on criteria directly linked to their educational effectiveness and operational efficiency.

Recommendation 2: Institute need-based scholarships as a means of reducing the exclusion of poor children from higher education. Scholarships would still be granted to those demonstrating the most merit, but only if they can demonstrate financial need.

Recommendation 3: Conduct a study of the feasibility of implementing a system of need-based student loans for students enrolled in university level education.

Recommendation 4: Implement an attractive severance package aimed at encouraging university staff to resign. As part of this, create and implement an early retirement program that offers favorable terms for those eligible (or nearing eligibility) to retire. For both groups, it will be important to provide adequate social protection for those who lose their employment. Such programs may be patterned after similar efforts now underway at the secondary school level.

Recommendation 5: Merge or abolish academic programs with low student enrollments.

Recommendation 6: Ensure that cost savings achieved by higher education institutions in downsizing staff and consolidating programs return to those institutions for reinvestment in quality improvement. This creates an incentive for universities to undertake efficiency improvements. For such a program to succeed, government would need to require that positions at the universities, once empty, not be refilled.

Recommendation 7: Ensure rigor in the accreditation process, particularly for private universities. Despite the evidence from the public universities that many students are able and willing to pay for higher education, the share of student enrollment in private universities is still very low. Helping to ensure the quality of private higher education can make it a more attractive choice for students, thereby reducing social demand on public higher education.

Recommendation 8: Reduce taxes for both public and private higher education institutions. Tie eligibility for these tax breaks to institutional accreditation. To the extent that the accreditation process operates as a serious mechanism to both encourage and assess quality, the tax breaks can serve to help raise the quality of higher education.

Recommendation 9: Extend and strengthen the management information systems at both the university and central government levels. As part of this, undertake a program to ensure that all institutions and central government agencies use the same definitions and formula for calculating widely used education indicators. In the Ministry of Education, a higher education information system could be an extension of the EMIS they are already developing as part of their secondary education project. However, there is also a need for comparable data and common definitions across ministries and agencies involved in higher education.

Recommendation 10: Reexamine the rationale and consequences of the current restrictions on sharing of institutional level data that are already collected by units of government, with specific attention to the State Department of Statistics. These data provide a basis for comparative assessments of institutional efficiency and could offer useful insights in efforts to strengthen higher education.

Recommendation 11: Undertake a series of tracer studies to collect information on ways universities can improve the relevance of their curriculum and pedagogical practices. Then create incentives for institutions to use this data in curriculum redesign. This type of curriculum redesign activity is often supported through bilateral projects involving twinning arrangements between a Georgian university and a university in the sponsoring country.

Recommendation 12: Undertake short- and intermediate-length training programs in higher education administration.. Administrative staff need access to a wider set of tools and skills for institutional management. One approach is though a series of twinning agreements with international universities that have strong programs in higher education administration.

These recommendations are offered as a means of promoting discussion and debate. Government and higher education officials in Georgia has made impressive gains in coping with the decline in resources experienced over the last ten years. Hard choices still have yet to be made.

References

Chapman, D.W. and Austin, A.E. (2002). Higher Education in the Developing World: Changing Contexts and Institutional Responses. Westport, Conn.: Greenwood.

Bray, M. ( 1999). The shadow education system: private tutoring and its implications for planners. International Institute for Educational Planning, UNESCO: Paris.

Ganat (2001). Population Expenses On Education, Backgound paper prepared for World Bank Mission in Georgia, Tbilisi: World Bank.

Ghlonti, (2001). Higher Education and Labor Market in Georgia, Background paper prepared for World Bank Mission in Georgia, Tbilisi: World Bank.

Gurgenidze, N. (2001). Review Of Students Admission/Selection Practices At Georgia Higher Education Institutions, Background paper prepared for World Bank Mission in Georgia, Tbilsi: World Bank.

Johnstone, D. B. (2001). Student loans in international perspective: Promises and failures, myths and partial truths, The international comparative education finance and accessibility project, Graduate School of Education, Buffalo: SUNY-Buffalo.

Johnstone, D. B. and Shoff-Mehta, P. (2001). Higher education access and accessibility: An international comparative examination of tuition and financial assistance policies, The international comparative education finance and accessibility project, Graduate School of Education, Buffalo: SUNY-Buffalo.

Kachkachishvili, Iago (2001). Study Of Private Higher Educational Institutions In Georgia, Present Status, Background paper prepared for World Bank Mission in Georgia, Tbilisi: World Bank. Kupatadze (2001). Evaluation System, Background paper prepared for World Bank Mission in Georgia, Tbilisi: World Bank.

Lorentzen, Jochen (November 1999). Georgian Education Sector Study: The Higher Education System, World Bank: Washington DC.

Machabelli (2001). Accreditation of Georgian Higher Education Institutions, Background paper prepared for World Bank Mission in Georgia, Tbilisi: World Bank.

Machavariani (2001). General Analysis of the Management Process Established in Higher Education Institutions of Georgia, Background paper prepared for World Bank Mission in Georgia, Tbilisi: World Bank.

Orivel (N.D.) Georgia Policy And Planning Unit, Background Paper Prepared For World Bank Mission In Georgia, Tbilisi: World Bank.

Perkins, Gillian (August 1998). The Georgian Education System: Issues For Reform Management. Background Paper Prepared For World Bank Mission In Georgia, Tbilisi: World Bank.

State Department for Statistics of Georgia (2001). Poverty Monitoring in Georgia, Annual report 2000 Statistical and Analytical Collection. Tibilisi.

Vossensteyn, H. (2001). Cost sharing and understanding student choice: Developments in Western Europe and Australia, The international comparative education finance and accessibility project, Graduate School of Education, Buffalo: SUNY-Buffalo.

World Bank (2001). Georgia: Public Expenditure Review, GEORGIA: Review of the Costs and Finance of Education, Washington DC: World Bank

World Bank (July 1998). Georgia: Education Sector Strategy Note, Report of the Education Sector Mission, Human Development Unit (ECSHD), Europe and Central Asia Region, Washington DC: World Bank

World Bank (2001). Georgia: Public Expenditure Review, Issues for Reform Management, Background Paper for Georgia Education Sector Strategy Note, Washington DC. Zaalishvili, Tamar (2001). Analysis Of Financing The Higher Education System Of Georgia, Background Paper Prepared For World Bank Mission In Georgia, Tbilisi: World Bank.

Table 1a

Approximate distribution of secondary school graduates , 2001-2002

Post secondary options Number

> Public university – state sponsored 11,868

> Public university – fee-paying 9,043 38,756 graduates > Private university – fee paying 5,407 from secondary > Postsecondary vocational or Not school in technical school availabl 2000 e

> Study abroad 408

> Enter Labor market 12,030 Source: Computed from MOE data a This table offers only an estimation of the distribution of secondary school graduates. Data were drawn from multiple sources and some key data, for example the number of secondary school graduates continuing in technical education, were not available. Table 2

High Education Institutions by Status, 2002

Institution Status Tbilisi Pedagogical University Independent Tbilisi State University Independent Tbilisi Technical University Independent Tbilisi Foreign Languages University Ministry of Education Batumi State University Local Government Tskhinvali Pedagogic University Ministry of Education Kutaisi State technical University Ministry of Education Telavi State Pedagogic University Ministry of Education Kutaisi State University Ministry of Education Gori State University Ministry of Education Tbilisi Economic-Relations State Univ. Ministry of Education Tbilisi State Conservatory Culture Tbilisi Art Academy Culture Tbilisi Theatre and Cinematogr. Instit Culture Tbilisi State Medical University Independent Georgian Sport Academy Sports committee Georgian Veterinary Academy Ministry of Education Georgian Agrarian University Independent Georgian Subtropical Institute Ministry of Education Police Academy Internal Military Academy Defense Intelligence Intelligence Tbilisi Culture State Institute Culture Batumi State Naval Academy Transportation Georgian State Co-operative Institute Tbilisi Business State Institute Source: Ministry of Finance

Insert Table 3 from landscape file Table 4 State Institutions and number of students by types 1997-2001 (at beginning of school year)

All Public Universities Combined

Number of Total Full State Year enrollment Women Evening Distance Institutions time 1997/1998 23 87258 40899 58813 1740 26705 1998/1999 24 90054 45648 62174 1372 26508 1999/2000 24 95013 44624 67468 1034 26511 2000/2001 26 105822 49834 77149 650 28023 2001/2002 26 115546 54887 87958 531 27057 State funded students (Budgetary students) 1997/1998 23 64467 28128 43820 1005 19642 1998/1999 23 59116 27387 43503 667 14946 1999/2000 23 60915 27270 46853 479 13583 2000/2001 25 65548 30129 52270 268 13010 2001/2002 26 65571 30419 54625 216 10730 Fee paying students at public universities 1997/1998 20 22791 12771 14993 735 7063 1998/1999 16 30938 18261 18671 705 11562 1999/2000 19 34098 17354 20615 555 12928 2000/2001 22 40274 19705 24879 382 15013 2001/2002 25 49975 24468 33333 315 16327

Private (Fee paying) Institutions Number of Total Full Women distance Year institutions enrollment time 1997/98 159 40162 22072 37207 2955 1998/99 154 38272 21508 37271 1001 1999/2000 162 40126 21753 37988 2138 2000/2001 146 33138 18160 32041 1097 2001/2002 153 31887 18425 31012 875 Source: State Department of Statistics

Table 5

Tuition paying students as percent of total enrollment at State Universities

Year % of total enrollment 1994/95 10.7 1995/96 12.8 1996/97 18.1 1997/98 26.1 1998/99 34.3 1999/00 35.9 2000/01 38.1 2001/02 43.3 Sources: Lorentzen, 1999 and State Department of Statistics

Table 6

Number of Students in State High Education Institutions, 2001-2002

State sponsored students Fee paying students Full Eveni Distanc Full Eveni Total time ng e Total time ng Distance 1 Tbilisi Pedagogical University 3359 2630 729 580 426 154 2 Tbilisi State 9539 9539 8639 6393 2246 3 Tbilisi Technical University 20863 15637 5226 4172 4172 Tbilisi Foreign Languages 4 Univer 1120 904 216 861 546 315 5 Tbilisi State Sokhumi Branch 1345 1336 9 4545 2693 1852 6 Batumi State University 3455 2532 923 2833 1700 1133 7 Tskhinvali Pedagogic University 1242 913 329 1451 712 739 Kutaisi State technical 8 University 2054 1921 133 2698 2394 304 Telavi State Pedagogic 9 University 1711 1579 132 845 460 385 10 Kutaisi State University 871 871 4210 2874 1336 11 Gori State University 2176 2040 136 2055 1549 506 Tbilisi Economic-Relation State 12 Univ. 804 804 1115 487 628 13 Tbilisi State Conservatory 303 303 65 65 14 Tbilisi Art Academy 806 806 330 330 Tbilisi Theatre and Cinematogr. 15 Instit 372 366 6 475 398 77 16 Tbilisi State Medical University 2005 2005 2421 2421 17 Georgian Sport Academy 1231 976 255 924 386 538 18 Georgian Veterinary Academy 1441 1008 433 210 90 120 19 Georgian Agrarian University 1944 1613 331 1069 33 1036 20 Georgian Subtropical Institute 3147 1482 1665 144 27 117 Tbilisi Conservatory Kutaisi 21 Branch 71 71 3 3 22 TSU Akhaltsikhe Branch 913 913 1273 580 693 23 Tbilisi Culture State Institute 419 419 112 112 24 Batumi State Naval Academy 723 723 1065 1065 Agrarian University (Marneuli 25 Branch) 242 192 50 2242 1304 938 Agrarian University (Telavi 26 Branch) 192 182 10 71 26 45 Georgian State Co-operative 27 Institute 625 394 231 28 GAU Batumi Branch 1068 705 363 1396 62 1334 29 Tbilisi Business State Institute 180 180 209 209 30 TSU Khakheti Branch 203 203 501 387 114 31 TBSI Akhaltsikhe Branch 94 59 35 32 TSU Ozurgeti Branch 220 174 46 33 TSU Zugdidi Branch 894 894 1225 846 379 Veterinary Academy Marneuli 34 Branch 40 40 10 10 Veterinary Academy Lanchkhuti 35 Bran. 93 93 65 65 36 TBSI Kutaisi Branch 213 213 Pedagogic University Tsageri 37 Branch 77 77 38 TSU Poti Branch 412 412 39 Sport Academy Zugdidi Branch 239 239 Pedagogic University Marneuli 40 Bran. 281 194 87 Veterinary Institute Akhaltsikhe 41 Bran. 52 52 Tbilisi Clergy Academy and 42 Seminary 317 317 43 Batumi State Conservatory 132 132 44 Batumi Art Institute 244 244 4997 Total Enrollment 65571 54625 216 10730 5 33333 315 16327 Source: State Department of Statistics

Table 7

Full time enrollment in private universities as a percent of total higher education enrollment, 1999/00 - 2001/02

1997/98 1998/99 1999/00 2000/01 2001/02 Public enrollment 58813 62174 67468 77149 87958 Private enrollment 37207 37271 37988 32041 31012 Total enrollment 96020 99445 105456 109190 118970 Enrolment in private universities 38.7% 37.5% 36.0% 41.5% 26.1% as a % of total higher education enrollment Source: Calculated from State Department of Statistics data

Table 8

Teaching staff in public higher educational institutions Republic of Georgia 1997-2001 (at beginning of school year)

State Private 1997/ 1998/ 1999/ 2000/ 2001/ 1997/ 1998/ 1999/ 2000/ 2001/ 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 Total teaching staff 10430 13548 14484 15461 16107 9144 11166 10423 10610 8712 Number of women 4733 6605 6850 7707 8050 3628 5132 5404 5233 4571 Women as % of total Full time 8214 9947 9398 10689 11209 2663 2496 3037 2714 2470 247124 Number of women 3665 4953 4633 5544 5723 911 1223 1565 1449 7 Half time ... 2204 2297 2698 2761 ... 614 534 542 379 Number of women ... 1367 1146 1572 1651 ... 303 295 326 170 Part time 705 1501 1532 2018 1867 3002 3747 2198 2956 2733 Number of women 317 469 417 639 586 1218 1779 986 1677 1512 Hourly employment 1511 2095 3536 2735 3020 3393 4908 5156 4936 3509 Number of women 751 1183 1800 1524 1741 1470 2120 2835 2105 1812 Invited from abroad ... 5 18 19 11 86 15 35 4 - Number of women ...... 29 10 18 2 - i Level of highest academic degree of teaching staff PhD 847 943 1149 1303 1234 639 234 301 351 365 Number of 102 ... 175 287 271 ...... 88 women Women as % of total Candidate 3406 3496 3491 3948 4347 825 546 844 662 638 Number of women Women as % of total 1406 ... 1612 1857 1970 ...... 200 Scientific Titles held by teaching staff Academician, professor 761 1053 1079 1325 1311 301 494 271 285 216 Number of women 101 ... 168 306 299 ...... 58 Women as % of total Docent 2635 2925 2670 3430 3344 571 3 610 561 433 Number of women 1045 ... 1292 1571 1471 ...... 156 Women as % of total Source: State Department of Statistics

Table 9

Number of Hours Required for Full Time Teachers Per Year in Selected Universities 2001/02

Institution Number of hours Tbilisi State 450 Georgian Technical 600 Georgian Agricultural 750 State Pedagogic University 700 Georgian Medical University N/A Source: Collected during site visits to universities

Table 10

Student - teacher ratio in public and private Georgia universities

Year Student/teacher ratio Public Private 1996-1997 10 4 1997-1998 8 4 1998-1999 7 3 1999-2000 7 4 2000-2001 7 4.9 2001-2002 -- 4.4 Source: 1996-1998 data from Lorenzen (1999); 1999-2000 data from State Statistics Department; 2001/02 data calculated from Table 3 in this report

Table 11

Student-Teacher Ratios in Higher Education in Georgia and Selected Countries

Country Student:Teacher ratio Georgia 7.0 United Kingdom 17.7 Germany 12.4 Czech Republic 13.5 Ireland 16.6 OECD Average - Source: OECD, 2000 Georgia ratio was computed from 2000/01 data provided from State Department of Statistics

Table 12

Proportion of Research Staff as Selected Universities

Number of Number of Research staff as Institution instructional research % of total staff staff employment Tiblisi State University 3851 2717 41%

Georgia Technical University 3792 642 14%

Georgia Agricultural University 882 106 11% Source: calculated from Ministry of Finance data

Table 13

Central Budget Expenditure on Education and Higher education. 1998-2002 (000’s Lari)

1998 1999 2000 2000 seq 2001 2002

Total state budget 761,836 1,080,700 1,074,200 815,900 922,875 1,061,228 Total state allocation to education sector 45,459 46,528 42,054 27,768 35,107 35,107 Education share as a % of total state 6.0 4.3 3.9 3.4 3.8 3.3 expenditures Total state expenditure on higher education 25,861 24,963 23,166 15,275 19,317 19,317 Higher education expenditures as a % of 56.9 53.7 55.1 55.0 55.0 55.0 total education expenditures Higher education expenditures as a % of 3.4 2.3 2.2 1.9 2.1 1.8 total government expenditures Source:Ministry of Finance Note 1. Expenditure data for 2000 is shown as original projections and after the sequestration (a substantial mid-year budget cut) Note 2. MOF indicated that state allocation to education (overall) and to higher education were held constant at 2001 levels.

Table 14

Institutional Expenditures in selected higher education institutions (Using 2001 academic year actual expenditure data provided by institutions)

Goods Personne and Travel Leftovers Student Other Total Institutions from last l and Materials year aid Expenditur Payroll Operatio n, Maintena nce Capital

Expenditures in 2001-2002

Tbilisi State Univ 6,477,96 1,630,67 44,274 2,030,05 73,559 235,179 10,491,698 2 3 1

Agriculture 522,536 21,727 8,413 9,422 15,729 180,056 757,883 Univ

2,116,04 246,462 43,920 2,325,64 23,484 806,498 5,562,047 0 3 Medical U

3,378,07 209,090 88,562 71,986 109,977 1,510,32 5,368,008 2 1 Technical Univ Foreign Languages and 872,809 37,175 132,338 5,615 116,203 1,164,140 Culture U

Pedagogical U 48,2355 30,364 400 98,290 15,692 153,958 781,059

Expenditures in 1997-98

Tbilisi State Univ 2,283,69 734,195 61,132 1,636,79 1,014,02 1,014,02 6,743,863 9 7 0 0

Agriculture 183,425 247,882 1,766 86,978 156,596 180,056 856,703 Univ

840,269 658,422 2,000 109,373 87,258 806,498 2,503820 Medical Univ

1,255,28 301,446 -- 70,036 822,128 1,510,32 3.959,212 1 1 Technical Univ Foreign Languages and 92,732 38,733 22,044 -- -- 31,182 184,691 Culture Univ

Pedagogical 240,500 65,241 2,566 186,277 -- 150,273 644,857 Univ

Per cent change in expenditures, 1997-98 to 2001-2002

Tbilisi State Univ 284% 222% -28% 24% -93% -77% 165%

Agriculture 285% -91% 476% -89% -90% 0% -13% Univ

252% -63% 2196% 2126% -73% 0% 222% Medical Univ

269% -31% New 3% -87% 0% 136% item Technical Univ Foreign Languages and 941% -4% ------268% 630% Culture Univ

Pedagogical 201% -53% 844% -48% -- 2% 121% Univ Source: Data collected during site visits to universities Insert Table 15 from landscape file here Table 16a

Expenditures per student and per staff member in selected higher education institutions, Ministry of Finance data, 2001-2002 (in Lari)

Estimated Number Estimated Total Number expenditu of FTE expenditure Institutions Expenditu of staff re per students per student staff (a)

Tbilisi State Univ 13,844,10 5280 2622 9539 2331 0

Agriculture Univ 1,676,900 988 1697 1779 943

5,432,700 1283 4234 295 2710 Medical Univ

6.031,700 3740 1612 18385 328 Technical Univ

Foreign Languages 1,736,400 255 6809 1012 1716 and Culture Univ

Pedagogical Univ 1,139,600 715 1594 2895 394 Source: Ministry of Finance for expenditure data; State Department of Statistics for enrollment data Note: $1 = 2.2 Lari (a) Calculation of full-time equivalent students assumed that part-time students were enrolled half time, so two part-time students were counted as one full- time student. To allow readers to recalculate using different assumptions, full and part time student count is provided in Table 17.

Insert Table 16b from landscape file Table 17

Institutional Expenditures per student and staff member in selected higher education institutions 2001-2002 (in Lari)

Estimated Number of Estimated Total Number of expenditur FTE expenditure Institutions Expenditur staff e per staff students per student (Note a)

Tbilisi State Univ 10,491,698 5280 2622 9539 2331

Agriculture Univ 757,883 988 1697 1779 943

5,562,047 1283 4234 2005 2710 Medical Univ

5,368,008 3740 1612 18385 328 Technical Univ

Foreign Languages 1,164,140 255 6809 1012 1716 and Culture Univ

Pedagogical Univ 781,059 715 1594 2895 394 Source: Data collected during site visits to institutions Note: $1 = 2.2 Lari (a) Calculation of full-time equivalent students assumed that part-time students were enrolled half time, so two part-time students were counted as one full- time student. Readers can use this data to recalculate using different definition of a full-time equivalent student.

Table 18 Distribution of Overall Education Expenditures by Level of Education, 1999

Levels of Education Local Central Total Administration 0 11.4 3.8 Kindergartens 11.2 0.9 7.7 General education 72.0 1.6 48.5 Boarding schools & 6.6 20.1 11.1 orphanages Technciums 0 4.6 1.5 Higher Education 3.0 55.5 20.6 Out-of-school institutions 7.2 5.8 6.7 Total 100 100 100 Source: Orivel, 2000; World Bank, 2001.

Table 19 Local and central education expenditures by level of education, 1998-2000 1998 1999 2000 1998 1999 2000 Levels of Education Local Budget (000, GEL) % Pre-schools 8415.2 10257 11155.2 13 15 16 Elementary education stage 1935.3 2196.2 3137.6 3 3 4 Major education stage 8353.4 10211.2 8439.8 13 15 12 Secondary schools 44068.8 44302.8 47458.4 68 66 67 Higher education 2293.7 263.4 237.5 4 0 0 Others n.a n.a n.a n.a n.a n.a Total 65066.4 67230.6 70428.5 100 100 100 Central Budget (000, GEL) % Pre-schools 316.7 113.1 128.4 2 1 1 Elementary education 1102.1 383.4 300.6 6 2 2 Secondary schools and 801.7 1442.7 1629.3 orphanages 4 7 8 Vocational schools 1683.1 828.5 575.2 9 4 3 Technicums and colleges 1485.3 2057 1783.4 8 10 9 Higher education 13039.8 13450.8 13119.9 67 67 67 Childcare houses 253.6 609.3 604.7 1 3 3 Special school 50.9 54.9 52 0 0 0 Special regime boarding 749 1179.6 1332.1 schools for disabled 4 6 7 Total 19482.2 20119.3 19525.7 100 100 100 Source: MOF

Table 20

Tuition charged fee-paying students in selected in selected public universities, 2001-2002 (fee rates are given for baccalaureate in USD p.a.)

Lari US$ (a)

Tbilisi State University (TSU) Department of International Relations 1980 900 Department of Law 1540 700 Department of Psychology 1100 500 Department of Economics 440-660 200-300

Georgian State University (minimal and maximal fees are given) Departments of Metallurgy, Geology, 330 150 Hydro-engineering Department of Law (Note b) 1650 750

Tbilisi State Medical University (c) Department of Pediatrics 1760 800 Department of Dentistry 2200 1000

University for Language and Culture English Language 1760 800 German Language 1320 600 French Language 1100 500 1 Source: Newsletter of TSU, 27.04.2002 2 Source: Prof. T. Kupatadze, Dean of the Department of Telecommunications 3 Source: Prof. L. Metreveli, Dean of the Department of Medicine-English medium 4 Source: Prof. N. Prangishvili, Vice-Rector Note a: $1 = 2.2 Lari Note b: Tuition at the masters level for Univerity of Georgia, Faculty of Law is US$900 per year Note c: Tuition for foreign citizens during 2000 was US$2000 per year

Table 21

Sources of Revenue for Selected Higher Education Institutions, 2001-2002 (Data provided by institutions; in GEL)

Institutions/ State Local Research Rent of Students Other non- Budgetary Unit Budget Govern Grants property fees budgetary Other Total ment Contri- revenue (a) butions For 2001-2002

Tbilisi State 2,990,565 -- 147,614 13,809 6,246,677 139,132 953,901 (a) 10,491,698

389,029 ------348,344 11,952 8,558 757,883

Agriculture U

1,068,620 ------3,512,440 -- 55,144 (a) 5,562,047

Medical U

Technical U 2,310,338 ------2,798,935 -- 258,735 (a) 5,368,008

Foreign 177,740 ------961,783 -- 24,617 1,164,140 languages and Culture U

416,196 ------332,275 -- 34,287 781,059

Pedagogical U

For 1997-1998

Tbilisi State 2,419,154 -- 10,395 2,531,181 33,243 4,993,973

498,673 -- 3,000 1830 85,958 75,386 8,558 673,405

Agriculture U 55,144 (left 968,299 -- 65,082 from last year 1,761,930

Medical U

2,448,891 -- 2,448,891

Technical U

Foreign 189,655 -- 189,655 languages and Culture U

644,857 -- 644,857

Pedagogical U Source: Collected in site visits to each of the universities included in the table Note a: Funds carried forward from previous year