PUBLIC SPENDING ON IN THE CIS-7 COUNTRIES:

THE HIDDEN CRISIS

Nicholas Burnett, Rodica Cnobloch, WB consultants

The paper was prepared for the Lucerne Conference of the CIS-7 Initiative, January 20-22, 2003

The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations or to members of its Board of Executive Directors and the countries they represent. The boundaries, colors, denominations, and other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries.

Table of Contents

I. Introduction ...... 3 II. The Context ...... 4 Demographic Trends...... 4 Educational Structures ...... 4 Total Spending on Education...... 5 Reform Efforts ...... 5 III. Adapting to the Market Economy ...... 7 Declining Enrollment and Attendance...... 7 Inadequate Quality: Learning Outcomes ...... 9 Inadequate Articulation with the Labor Market ...... 10 IV. Appropriate and Sustainable Public Spending on Education...... 11 Share of GDP and Budget...... 11 Financing ...... 12 Revenue Generation...... 12 Sustainability ...... 12 V. Ensuring Efficient and Equitable Public Spending...... 13 External Efficiency: Allocation Across Levels ...... 14 Internal Efficiency: Allocation to Different Inputs...... 15 Input Allocation and Quality ...... 16 Input Allocation and Internal Efficiency ...... 18 Equity of Public Spending ...... 21 VI. Ensuring Equity in Private Spending on Education ...... 23 VII. Summary...... 25 Bibliography...... 28 Appendix 1 – Sources and Notes for Tables and Figures...... 29

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I. INTRODUCTION

The seven poorest countries of the Commonwealth of Independent States have an extraordinary achievement that is not well recognized: they have maintained their education systems in the face of precipitous declines in GDP. Several have also initiated reforms to begin to adjust their systems toward the needs of a market economy and to increase the number of years in general education toward the European norm of 12.

Deeper reform is needed, however, if the education systems are to continue to function effectively and to adapt fully to new economic and social structures. Indeed, it is not too much of an exaggeration to suggest that the countries may face a hidden crisis, in sharp contrast to the “hidden challenges” faced by transition economies more generally1. To avert this crisis, these countries must adapt their systems more rapidly to the realities of reduced public funding and to the needs of the market economy.

The crisis is hidden for three reasons. First, as noted, the education systems continue to function and have not collapsed. Second, the crisis has been somewhat masked by more successful reform efforts in transition countries with higher per capita incomes, such as those seeking European Union accession. Third, the hidden crisis has not provoked any visible human or fiscal crises, as has happened with attempts to shore up deteriorating health and social protection programs. The medium- and long-term effects of the hidden crisis in education among the CIS-7 countries are likely to be very serious indeed, however, if deep reforms are not urgently undertaken. Fortunately it is not too late, and there are some encouraging signs of a growing realization that reform is necessary.

This paper identifies four principal areas for reform of public spending if education is to contribute to economic growth and poverty reduction in the seven poorest CIS countries. The paper does not cover all aspects of education but focuses particularly on public spending and how it might be adjusted in the following areas:

1. Adapting education systems to the market economy; 2. Increasing public spending on education and making it sustainable; 3. Improving the efficiency and equity of public spending on education; and 4. Ensuring equity in private spending on education.

Each area is discussed in turn in Sections III-VI. First, however, Section II provides the context in terms of demographic trends, changing educational structures, overall education spending (public and private), and system reform efforts in the countries. Finally, Section VII summarizes the major recommendations.

1 See, for instance, the title of World Bank, Hidden Challenges to Education Systems in Transition Economies, 2002

3 II. THE CONTEXT

The seven countries have in common that they all have suffered severe declines in GDP and hence in per capita income. Beyond this, they exhibit both common features and differences that are relevant for education.

Demographic Trends The school age population is declining in three of the countries (Armenia, Georgia and Moldova), is roughly constant in two (Azerbaijan and the Kyrgyz Republic) and is growing relatively rapidly in two more (Tajikistan and ). Some countries have experienced unusual individual years in terms of the school age population, due mainly to migratory movements, but the overall trends can be seen in Figure 1. These trends imply very different implications for future spending on education. To oversimplify, at least at the compulsory level of general education, Central Asian countries must continue to plan for system expansion while Caucasus countries and Moldova must reduce the size of their education systems.

Figure 1

Population growth, 5-17y.o. (beginning of the year)

10.0

5.0

0.0 Armenia Azerbaijan Georgia Kyrgyz Rep. Moldova Tajikistan Uzbekistan

-5.0

-10.0

-15.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Source: Sources for all figures and tables are in Appendix 1

Educational Structures Inherited from the common structure of the Soviet Union, the education system in all CIS-7 countries is based on four levels: , general education, (specialized secondary and vocational) and higher education. General education has three components: primary education (grades 1-4), lower secondary (grades 5-9), and upper secondary (grades 10- 11). There are minor variations around this – in Armenia, for instance, primary covers grades 1-

4 3 and lower secondary grades 5-9; in Georgia primary covers grades 1-6 and lower secondary grades 7-9; in Moldova and, more recently, Uzbekistan, there is a third year of upper secondary that therefore covers grades 10-12. Compulsory education is generally for the first nine years, except in Azerbaijan (11 years), Kyrgyz Republic and Moldova (in both, recent reforms call for 12 years, although this is not yet in place). Compulsory education is generally meant to be free to the students, but is often not so in practice, as discussed later in this section.

The secondary system of vocational and technical (VET/PTUs) and specialized (technikums) education is almost identical in all seven countries. Technikums offer a more professional and academic focus, accepting enrollment from general education either after grade 9 or after grade 11. VET programs in PTUs also accept enrollment at either stage but their courses last for 1-2 years in Armenia, Azerbaijan, Georgia and Uzbekistan and for 2-3 years in the Kyrgyz Republic, Moldova and Tajikistan. Courses in technikums last 2-4 years, depending on the grade of enrollment, except in Moldova where there are three stages, each requiring competitive entry (2 years, 2 years, 1 year).

Total Spending on Education Combined public and private spending on education varies between 2.5 and 8.7 percent of GDP, for the four CIS-7 countries for which private as well as public spending data are available (Table 1). Overall this is much less than OECD countries typically spend. Public spending’s share of GDP is much lower than in OECD countries, with the exception of the Kyrgyz Republic, while private spending is 3-5 times higher, with the exception of Armenia and Moldova (Moldova not shown in table).

Table 1: Education Spending as a Percentage of GDP, most recent year Armenia Georgia Kyrgyz Rep Tajikistan OECD Country Mean Year 1998 2000 1998 1999 1998 Public Spending 2.1 2.2 4.9 2.1 5.0 Private Spending 0.4 3.0 3.8 2.1 0.7 Total Spending 2.5 5.2 8.7 4.1 5.7

Reform Efforts Countries differ considerably in the extent of their reform efforts to date. Moldova and Georgia, for instance, have attempted quite extensive reforms. Tajikistan has only recently begun to reform. Reform efforts have begun to cover the curriculum (including especially subjects such as history and languages where countries are keen to reflect their status as no longer members of the Soviet Union); the modernization of textbooks; the extension of general education to the 12 years that is the OECD norm, as in Moldova, Uzbekistan and the Kyrgyz Republic; attempts to raise the student:teacher ratio and rationalize the teaching force, as in Georgia; the recent introduction of per student financing in Kyrgystan; regrouping of higher education programs into the model of bachelor and masters degrees, as in Uzbekistan; and, in all countries, the decentralization of public spending, with most general education now being financed out of rayon level budgets rather than out of the State budget, as was the case during the Soviet period. This decentralization has largely been a response to declining resources at the State’s disposal,

5 however, and has not generally been accompanied by any major decentralization of decision- making or spending authority, although this is now beginning in some countries such as Armenia.

While curricula have been one of the main foci of reform efforts so far, all countries have a long way to go to modernize these at all educational levels and to switch to teaching and learning that emphasizes critical thinking and problem solving rather than the mastery of specific subject material. In most countries, also, the curriculum remains heavily overloaded – in Tajikistan, for instance, there are 36 different subjects in Grades 9-11, requiring large numbers of specialized subject teachers, with important implications for efficiency.

6 III. ADAPTING TO THE MARKET ECONOMY Modern economies are characterized by education systems that reflect the needs of both the economy and society. Increasingly, and certainly with the emergence of knowledge-based economies, this means that citizens require the ability to think critically and to learn new skills throughout their working life, rather than just acquiring specific skills from education before entering the labor force. This has a simple implication for education systems: as many students as possible should receive as much general education as possible and that education must be of good quality. By contrast, vocational and specialized courses are less desirable prior to entry onto the labor market, as they tend to teach specific skills rather than more general ones. Unfortunately there are signs that the level of enrollment in general education is declining in all countries and also indications that quality may not be up to international standards. Declining Enrollment and Attendance During the Soviet period, enrollment in basic education (Grades 1-9) was high, essentially at 100 percent, in all the countries. On the basis of official data, gross enrollment rates at this level have since fallen in all seven countries over the last decade (Figure 2), such that they now exceed 90 percent only in Moldova and are even below 85 percent in both Armenia and Tajikistan. This is in marked contrast to other transitional economies such as Poland and Russia, in which rates have remained roughly constant. The proportion of girls to boys is roughly equal in general education through Grade 9 in all CIS-7 countries. Beyond Grade 9, however, country experiences differ considerably. The proportion of girls in total Grade 10 and 11 enrollment has increased in Azerbaijan and Moldova, such that it is now around 50 percent, while it has fallen in Tajikistan from an already low 41 percent in 1991 to only 34 percent in 2000. Enrollment is not the same as attendance or completion, however. Data from household surveys indicate that attendance in basic education is a major problem in Uzbekistan, in contrast to what is shown by official data (Figure 3). Net Grade 1-9 attendance rates appear to be below those even in Tajikistan. This is more pronounced for rural than for urban students in Uzbekistan, an issue also in Azerbaijan albeit at much higher attendance rates. Figure 2: Gross Enrollment Rates, Grades 1-9, Official Data, 1989-99

100

95

90

85

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75

70 Armenia Azerbaijan Georgia Kyrgyz Moldova Tajikistan Uzbekistan Poland Russia

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

7 Figure 3: Net Attendance Rates, Grades 1-9, Household Surveys

100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Armenia, 1998 Azerbaijan, Georgia, 2000 Kyrgyz Rep., Moldova, 2001 Tajikistan, 1999 Uzbekistan, 1995 1998 2001

Rural Urban

By contrast to general education, gross enrollment rates in higher education have generally increased in all CIS-7 countries except Tajikistan and Uzbekistan (Figure 4), with the proportion of women students gradually rising in all countries except the Kyrgyz Republic (where it is now around 50 percent, having been 54 percent a decade ago) and Tajikistan, where it has fallen to 24 percent. In all countries except Tajikistan and Uzbekistan, access to higher education has also become more democratic. In Uzbekistan, however, the trend has been in the other direction, with enrollments increasingly being the preserve of the richer households and with enrollments declining precipitously. Figure 4: Gross Enrollment Rates in Higher Education, 1989-99

45

40

35

30

25

20

15

10

5 Armenia Azerbaijan Georgia Kyrgyz Moldova Tajikistan Uzbekistan Poland Russia

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

8 From a medium- to long-term perspective, the most worrying enrollment trend is the decline in enrollments and attendance in general education, especially in Tajikistan and Uzbekistan, but throughout the CIS-7 countries. There are clearly some discrepancies between the gross and net data from different sources but there seems no doubt of the overall decline. Reasons for non-attendance have been investigated in living standards surveys in four countries, though not using comparable survey questions (Table 2). Important factors across countries include illness, private costs (including supplies), a lack of interest/demand, and the absence of schools (especially in rural Azerbaijan and the Kyrgyz Republic). In Tajikistan, also, important reasons are bad weather, lack of clothing and illness. When the survey results are broken down by gender, important differences arise in Armenia, Azerbaijan, the Kyrgyz Republic and Tajikistan, where girls are much more likely than boys to have completed school or their education, reflecting a cultural bias against extended education for girls.

The almost complete collapse of higher education in Uzbekistan is also cause for concern. While higher education may not have any immediate impact on the reduction of poverty, all economies need managers and others with a higher education background, and future knowledge economies even more so than in the past.

Table 2: Reasons for Non-Attendance in Basic Education by Location, Percent Armenia Armenia Azerbaijan Azerbaijan Georgia Georgia Kyrgyz Kyrgyz Rep Rep Rural Urban Rural Urban Rural Urban Rural Urban Illness 15 14 6 15 51 65 7 0 Costly 4 11 27 14 19 28 No supplies 49 31 0 28 Have to work 0 4 1 0 Don’t want 15 4 Completed 4 0 school Completed 7 4 3 21 18 22 education Bad quality 4 4 Temporary 4 0 1 0 No School 10 0 0 5 20 0 Don’t like 8 10 25 22 Armenian 6 0 aggression No sense 3 3 Sibling goes 4 0 instead Never went 4 0 Other 48 61 34 37 4 0

Inadequate Quality: Learning Outcomes There is no internationally comparable data available on learning outcomes for the CIS-7 countries. Only Moldova has participated in any of the international studies; it took part in the 1999 Third International Mathematics and Science Study (TIMMS) for Grade 8 students. Moldovan students’ scores were below the average for all participating countries, for OECD countries and for other countries in Europe and Central Asia that participated. No other CIS-7 country took part in the TIMMS nor did any of the seven participate in other international

9 learning assessments, notably OECD’s Program for International Student Assessment (PISA) or International Adult Survey (IALS). Other countries in Europe and Central Asia that did participate in TIMMS, PISA and IALS assessments tended to do well on TIMMS but poorly on IALS and PISA. The same pattern would likely be found had the CIS-7 countries participated, but probably at lower levels. This is because both PISA and IALS assess critical thinking skills whereas TIMMS assesses curricular knowledge. Several countries have plans to introduce assessments of critical thinking, but no comparable data is yet available for any country over time to see if the objective of improvement in this area is being met.

Spending by most countries on the non-salary inputs that are critical for quality (teaching materials, training of teachers in modern , even building maintenance) has declined also, as will be discussed in section IV. This suggests, though does not establish definitively, that learning quality is likely declining also and certainly makes it unlikely that there is sufficient introduction of the modern interactive teaching essential to the development of critical thinking skills among students.

Inadequate Articulation with the Labor Market While enrollments have generally remained roughly constant in specialized secondary and vocational schools, the graduates of these institutions over the last decade generally have higher unemployment rates than those with other school qualifications and than older graduates of the same schools. This appears to be the case, on the basis of scant data, in Azerbaijan, Georgia and Tajikistan; data are not available for the other countries. If this finding is accurate, it would imply that these schools are not well adapted to the emerging labor market needs, compared to more general types of education. This would certainly be consistent with most market economies around the world. When, as will be shown later, it is considered that vocational schools generally have higher unit costs than do general schools, it raises considerable questions about the need to maintain these types of schools.

10 IV. APPROPRIATE AND SUSTAINABLE PUBLIC SPENDING ON EDUCATION

Public spending on education is very low as a share of GDP in the CIS7 countries, generally reflecting the low share of public spending in GDP rather than low public expenditure shares for education. Moreover, there are questions about the sustainability even of these low levels of expenditure, as arrears are building up in education spending in several, though not, in all of the seven countries. Several countries may wish to reconsider plans to expand the number of years in general education, however, until they have placed their education financing on a more sustainable basis and until they have realized major efficiency gains at present levels of spending. Share of GDP and Budget The typical pattern of public spending on education over the last decade has been an initial drastic decline, bottoming in the mid-1990s, followed by a very modest increase (Table 3). Initially, the Kyrgyz Republic and Moldova were exceptions to this pattern, but their spending has also recently declined very rapidly. Public spending on education averaged 3.9 percent of GDP by 2000, about 1 percent below the OECD mean, compared to 7.6 percent in 1992. This average, however, conceals extremely low levels in Armenia, Georgia and Tajikistan. Table 3: Public Spending on Education as Percentage of GDP, 1992-2001 1992 1996 2000 2001

Armenia 7.8 2.5 3.0 2.8 Azerbaijan 6.7 3.7 3.9 4.8 Georgia 5.0 1.3 2.2 2.2 Kyrgyz Rep 5.0 5.2 3.5 Moldova 7.3 10.1 4.5 Tajikistan 11.1 2.1 2.1 2.4 Uzbekistan 10.3 7.4 8.4

These declining shares of public education spending in GDP reflect in turn declining shares of public expenditure in GDP, rather than any particular reduction in allocations to education (Table 4). Indeed, some countries such as Azerbaijan and Uzbekistan have increased the share of spending going to education. Education’s share of total public spending in the CIS-7 countries is broadly in line with or even exceeds the OECD country mean of 13 percent2. Table 4: Public Spending on Education as Percentage of Total Public Spending, 1992-2001 1992 2001 Armenia 11 11 Azerbaijan 13 20 Georgia 16 12 Kyrgyz Rep 16 23 (1998) Moldova 19 (1995) 13 (1999) Tajikistan 19 17 Uzbekistan 23 26 (1999)

2 OECD, Education at a Glance, 2001.

11 Financing As a result of the decentralization of education finance, in all the CIS-7 countries, public spending on education is largely financed from local budgets, typically about 80 percent or more, with the balance coming from the central budget (Figure 5). The exceptions are Kyrgystan and Uzbekistan, in which the funding is provided in the local budget, but derives largely from transfers from the central budget. In Georgia, the proportion financed from local budgets was initially lower than in the other countries but has now begun to increase. Central budget spending is typically for vocational, higher and specialized secondary education, rather than for general education.

Figure 5: Local Financing of Public Spending on Education, 1996-2001

90.0

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0.0 1996 1997 1998 1999 2000 2001

Azerbaijan Georgia Kyrgyzstan Tajikistan Uzbekistan

Revenue Generation Faced with declining public expenditure allocations, several countries have encouraged public educational institutions to raise revenues directly. Some of this is from the charging of fees, especially at higher education institutions, where an increasing proportion of students occupy paid places – these are discussed below under private expenditure. In addition, schools and other institutions are being encouraged to generate income from other sources. In Tajikistan, for instance, schools have been granted land plots that they can rent out for agriculture. Moldovan institutions are also encouraged to generate revenues from the sales of goods and services, though such revenues are very minor compared to allocations from the public purse. These revenues are normally included in the budgets of the institutions.

Sustainability In recent years, actual public spending on education has tended to exceed that budgeted in Georgia and Tajikistan while falling below budget in Armenia, Azerbaijan and the Kyrgyz Republic (Table 5). This has resulted in considerable arrears in some countries, though not in all (0.25% of GDP in Armenia in 2000; of teacher salaries and utility payments in Azerbaijan; of teacher salaries in the Kyrgyz Republic).

12 Table 5: Actual vs. Budgeted Public Education Expenditure, Percent, 1997-2001 1997 1998 1999 2000 2001 Armenia 88 87 87 89 Azerbaijan 83 91 95 92 Georgia 84 78 85 110 Kyrgyz Rep 67 Tajikistan 96 114 91 109 102

The emergence of arrears in some countries and the pervasive recourse to revenue generation indicates that even the low levels of public spending compared to GDP may not be sustainable, given present overall allocations of public spending. In order to avoid the risk of losing a generation’s education (in terms of both reduced enrollments and inadequate quality), countries may wish to consider increasing the share of education in public spending to higher levels than today. Both Azerbaijan and Tajikistan have moved to do this in recent years, though the Tajikistan share of GDP remains one of the two lowest, the other being Georgia. Armenia clearly has scope to reallocate within overall public spending in favor of education, as it currently represents only 11 percent of public spending. Some countries could perhaps spend more on education were their debt servicing burdens relieved. In Tajikistan, for instance, debt relief could free another one percent of GDP, some of which could be allocated to education. Pending such structural fiscal changes, education would seem to be a priority for external assistance, especially in countries such as Tajikistan which are clearly at risk of not meeting the Millenium Development Goal of a complete primary education for all children.

Major increases in public spending are not likely, however, until countries’ tax efforts improve. In their absence it is essential that public spending be as efficient and equitable as possible (Section V). It is also inevitable that there will be continued reliance on private spending, and this must not deter the enrollment of the poor or increase inequity (Section VI).

V. ENSURING EFFICIENT AND EQUITABLE PUBLIC SPENDING.

Efficient public spending is that which allocates public spending to those levels with the highest returns (external efficiency) and which optimizes the combination of inputs to deliver education of high quality at minimum cost (internal efficiency). External efficiency can be improved in some of the countries by an increased concentration on general education, especially a reduction in spending on . In general, potential external efficiency gains are relatively limited, however. In most CIS-7 countries, by contrast, there is enormous scope to improve internal efficiency, particularly by reducing the share of salaries compared to non-salary inputs, by improving energy efficiency and by reducing teacher numbers compared to students but paying remaining teachers more in order to motivate them to teach and limit their need to generate income from sources other than their salaries. In terms of equity, public spending is in general reasonably distributed across different income groups in society, though it does tend to favor the better off in higher education, as in many countries. Improving the poor’s education may, however, warrant biasing spending at all levels toward those from poorer backgrounds – in simple terms, more spending per student may be warranted for those who come from homes without books and where parents have lower levels of education themselves.

13 External Efficiency: Allocation Across Levels In general terms, public spending should be allocated where it will provide the maximum level of general education of high quality. This means a concentration on general education, and indeed only Moldova allocates less than half its education spending to general education. Azerbaijan, Georgia, the Kyrgyz Republic and Tajikistan all approach the 70 percent level for primary and secondary education that is typical in OECD countries (Figure 6). There is thus only limited scope to improve efficiency by allocating spending significantly away from vocational and higher education toward general education in these countries.

80.0

70.0

60.0

50.0

40.0

30.0

20.0

10.0

0.0 Pre-primary Basic VET Tertiary

Armenia Azerbaijan Georgia Kyrgyz Moldova Tajikistan Uzbekistan Figure 6: Allocation of Public Spending Across Educational Levels, 1998

This is not the case, however, in Armenia, Moldova and Uzbekistan, where some efficiency gains could likely be realized by increasing the share of general education in public expenditure, especially in Moldova which allocates the least to this level and in Armenia where public spending is such a low proportion of GDP. Reallocations could come from vocational education (Uzbekistan) and higher education (Armenia and Moldova). Moldova spends a relatively high proportion on preschool – it will be important to ensure that this is targeted on poorer children. There may be scope also for reducing spending on vocational education in the Kyrgyz Republic and on higher education in Georgia, even though these two countries allocate a reasonable proportion to general education, as public education spending is so low in both countries as a share of GDP. Where resources are extremely scarce, it is even more important that they be allocated where returns are highest. Equity considerations would also indicate that higher education, which benefits individual graduates significantly in terms of increased salaries on graduation, should largely be financed by the individuals who benefit.

Within the various subsectors, moreover, there appears to be significant inefficiency outside general education (Table 6). . Public spending per student at the pre-primary, vocational and higher levels, in relation to that on basic education (grades 1-9), is significantly above international averages. This is driven largely by very low student:teacher ratios at these levels. In all countries, spending is normally higher at these levels for this reason but it seems to be excessively so in the CIS7 countries. In OECD countries, for example, upper secondary spending per student tends to be about 50 percent higher than in primary education, with higher

14 education being about 100 percent greater and preschool about the same as primary education. Unfortunately the CIS-7 data do not permit the disaggregation of spending within general education, to enable a comparison to be made with primary education spending. It can be seen in Table 6, however, that spending per student on levels other than general education is significantly higher in relative terms than in OECD countries, and reaches extraordinary heights in two countries, Armenia and the Kyrgyz Republic. Everywhere it is at least twice the OECD ratio. Since students in higher education tend to come from more privileged backgrounds, equity arguments also point in the direction of reducing the share of higher education in total education spending in some countries, especially those with low shares going to general education.

Table 6: Public Spending per Student in Preschool, Upper Secondary and University as Percentage of That in General Education, most recent year Year Preschool Upper Secondary University Armenia 2002 860 590 Kyrgyz Republic 1998 339 595 628 Moldova 2000 234 370 260 Tajikistan 2001 252 277 197 Uzbekistan 2001 363 471

Internal Efficiency: Allocation to Different Inputs Although public spending is dominated by local financing (Section IV above) and by general education, this does not mean that financing decisions are taken locally. The normal pattern is that the central Ministries of Education and Finance determine spending, applying norms that concern the number of subjects to be taught and the number of teachers to be used. Other norms also come into play (e.g. for the number of sanitary facilities per 100 students) but those concerning teachers and other educational system employees are the critical ones, as salaries (including related pension fund contributions) dominate public spending, accounting for 70 percent or more, except in Moldova (Figure 7).

Other than salaries, other major expenditure items are typically utilities (mainly for heat in winter) and food (mainly but not only in boarding institutions). Both generally account for about 5 percent of public spending, though this can vary, expenditure on energy being much higher in Azerbaijan, for instance, and on food in Moldova. Noticeably low in spending is that on capital investment and repairs, typically around 3 percent or less of public spending, though this has varied enormously in some countries, especially Armenia, largely reflecting the availability of foreign aid (Figure 8).

15 Figure 7: Salaries as Percentage of Public Spending on Education, 1997-2002

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Armenia Azerbaijan Georgia Kyrgyz Moldova Tajikistan Uzbekistan

Figure 8: Capital Investment and Repairs as a Percentage, 1997-2002

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0 1997 1998 1999 2000 2001 2002

Armenia Azerbaijan Georgia Moldova Tajikistan

Input Allocation and Quality In the absence of reliable labor market and learning outcome data in the CIS-7 countries, an attempt can be made to assess the quality of their education systems by examining the

16 availability of their educational inputs: physical infrastructure; curriculum; textbooks and learning materials; and teacher availability, motivation and training.

Physical Infrastructure. Reflecting the very small resources allocated to capital investment and repairs, the physical condition of the CIS-7 countries’ educational institutions has deteriorated. In many countries there has been no new investment since independence and no maintenance for 20 years, as the former Soviet Union stopped such spending in the mid-1980s. In several CIS-7 countries, this has been further compounded by physical damage resulting from civil conflict and war. Lack of maintenance has implications for other recurrent cost items: the frequency of broken windows in Tajikistan schools, for instance, means that heating costs are much higher than would otherwise be the case. Textbooks and Learning Materials. The provision of books is now generally a parental responsibility in the CIS-7 countries, with very little public spending going toward them. Moreover, books are in short supply and are often not adapted to even the modest curricular reforms that have been introduced. Donor projects have started to provide books and teacher manuals in several countries, such as Armenia and Tajikistan, but the supply of books and other materials remains seriously inadequate throughout the CIS-7 countries, quite aside from the issue of parental ability to pay for them. Teacher Availability, Motivation and Training. Teachers in all CIS-7 countries have trouble making a living, due to salaries that have declined more than in other sectors and are now typically about 60-70 percent of the average wage in all countries except Armenia, where they roughly equal average wages (Figure 9). This decline in teachers’ earnings compared to those elsewhere in the economy has severely demotivated teachers and many who have alternatives have chosen them, resulting in an increase in the average age of teachers in some countries such as Georgia. Those who remain in teaching often have to conduct other activities to earn a living and this affects both their motivation and even their attendance in schools and other institutions. Low motivation has meant that training provided to help modernize teaching methods and support the new curriculum has not been enthusiastically embraced.

17 Figure 9: Wages in Education compared to Average Wages, 1989-2002

110.0

100.0 Armenia 90.0 Azerbaijan Georgia Kyrgyz 80.0 Moldova Tajikistan 70.0 Uzbekistan Russia 60.0

50.0

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Input Allocation and Internal Efficiency There is little scope to increase internal efficiency by reducing repetition and dropout and by increasing school sizes. By contrast, considerable gains can come from increasing student:teacher ratios while paying teachers more, increasing energy efficiency; introducing multi-grade teaching in small remote schools with small enrollments in each grade; and by ensuring that there are sufficient resources for non-salary inputs to education.

Repetition and Dropout. Repetition rates are extremely low in CIS-7 countries and there is little scope for efficiency improvements here. Dropout rates are not available for most countries – they are high in Georgia (Table 7) and are increasingly important explanations of non-enrollment also in Tajikistan and Uzbekistan. In other countries, such as Armenia, such information as exists indicates a relatively low dropout rate and efficient throughput of students.

Table 7: Repetition and Dropout Rates, 2000 Repetition Repetition Dropout Dropout Primary Lower Primary Lower Secondary Secondary Armenia 0.6 0.9 Georgia 0.3 0.4 4.7 4.8 Kyrgyz 0.3 0.3 0.1 0.1 Moldova 1.0 1.0 Tajikistan 0.5 1.1 Uzbekistan 0.1 1.1 1.3

18 Student:Teacher Ratios. Teachers’ wages have deteriorated relative to that of other workers in most CIS-7 economies. Yet teacher numbers are very high compared to students (Table 8) and below OECD averages for countries with much higher per capita incomes. Low student:teacher ratios do not necessarily mean that class sizes are small, however. There is much teacher absenteeism, significant numbers of teachers do not teach – as many as 10 percent of teachers in Tajikistan, for instance, may be receiving salaries while not contributing to the education system. The international PISA assessment indicates that ratios of 25 and more students to one teacher produce good results. There is thus enormous scope to reduce the number of teachers, by at least 50 percent in all countries and even more in others, while paying those who remain much more and possibly also freeing up some salary resources for other critical inputs such as building maintenance and textbooks. Such a reduction would require an abandonment of the system of norms that is used in all CIS-7 countries to determine teacher numbers – these norms refer to the number of subjects studied (in an overloaded curriculum, as we have seen) and then require single subject teachers at all post-primary grades. Reform would have to involve teachers teaching more subjects beyond the primary level, at least through the middle of secondary education.

Table 8: Student:Teacher Ratios, General Education, most recent year Year Ratio Armenia 2002 11.2 Azerbaijan 2000 10.0 Georgia 1999 10.4 Kyrgyz Republic 1998 15.0 Tajikistan 2001 15.6 OECD Country Mean - Primary 1999 18.0 OECD Country Mean - Secondary 1999 14.6

Detailed norms also determine the number of non-teaching staff in CIS-7 education systems. Comparative data are not available on non-teaching staff in the countries but they are generally excessive compared to those found in other countries. Moreover, there has been little change in the ratio of students to nonteaching staff in countries for which data do exist. In Moldova, for instance, the ratio increased from 9.5 in 1997 only to 11.2 in 1999. In the Kyrgyz Republic the ratio of teaching to support staff in general education in 1998 was 2.1 compared to the higher OECD average of 2.9.

Energy Expenditure. All CIS-7 countries spend a high proportion of their public resources on utilities, mainly heat in the winter (Figure 10). This is particularly the case in Moldova, the Kyrgyz Republic and Tajikistan. Reduced spending in all three countries over the years does not necessarily signal a more efficient use of utilities but rather a shortage of resources. Schools in Moldova and Tajikistan routinely close because of a lack of heat. Most school buildings are poorly insulated – over 78 percent surveyed in Moldova were “poorly” or “very poorly” insulated compared to less than 5 percent “well” insulated. In addition, many school buildings are much too large, especially as enrollments have declined. Spending on

19 energy has crowded out spending on building maintenance, which could reduce energy costs, and on pedagogical inputs such as books and materials. Investment in energy efficiency could yield significant savings in expenditure and also produce major gains in overall learning as it would increase school attendance by students.

Figure 10: Expenditure on Utilities as Percentage of Public Education Expenditure

35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0 1997 1998 1999 2000 2001 2002

Armenia Azerbaijan Georgia Kyrgyz Moldova Tajikistan Uzbekistan

School Size. In several countries, especially in the Central Asian countries of the Kyrgyz Republic, Tajikistan and Uzbekistan, there are significant numbers of small schools, usually in relatively remote rural areas. There is some scope to rationalize spending by increasing average school size but this is very limited and would be largely offset by increased transport and/or boarding costs, quite aside from the social and political difficulty of doing so. Costs at these small schools, which inevitably also have small class sizes, can be brought down, however, by increasing class sizes through the introduction of multigrade teaching. As with teacher numbers in general, this would require a change in the pervasive system of norms that govern the CIS-7 education systems.

A different aspect of school size, which is more relevant to urban areas, has to do with the use of physical plant, including the number of shifts in each building. Country circumstances vary widely here. In Tajikistan, for instance, over 80 percent of school buildings are now used for more than one shift. In Armenia, by contrast, almost all schools, even in urban areas, are single shift. In the Kyrgyz Republic, only 82 percent of physical facilities are used overall, with the utilization ratio dropping to 66 percent in one region. More analysis is needed to make firm recommendations on the potential for increased multiple shifts in urban areas – this is most pressing, however, only in countries with growing school age populations. In other countries, especially those with declining school age populations, there may be scope for reduction in the physical plant of the education system.

20 Equity of Public Spending In general, public spending is fairly evenly distributed in those countries for which benefit-incidence can be calculated, especially in general education (Table 9). VET and other technical education expenditure tends to be weighted toward the poorer students and higher education toward the richer ones, although there are some anomalies, such as the richest quintile in Armenia not benefiting as much as the 2nd-4th quintiles from higher education spending, possibly reflecting the choice of private and foreign by richer Armenian families. The pro-rich nature of higher education spending is not egregious internationally, however; in Vietnam, for instance, the richest quintile captures 72 percent of higher education spending.

21

Table 9: Benefit-Incidence of Public Spending on Education, most recent year Country Year Level Poorest 2nd 3rd 4th Richest Quintile Quintile Quintile Quintile Quintile Armenia 1998/99 Grades 1-8 15 18 21 23 23 Grades 9-10 15 17 20 22 16 VET 24 21 27 12 17 Higher 6 28 19 25 12 Total 15 19 21 22 23 Azerbaijan 2001 Grades 1-9 19 20 21 21 19 Technical 28 19 22 19 13 Grades 10-11 College 19 17 22 14 27 Grades 10-11 University 12 19 15 24 30 Total 18 19 20 21 22 Tajikistan 1999 General 21 19 21 20 19 Grades 1-11 Specialized 14 15 21 22 28 Secondary and Higher

The generally even distribution of public spending in general education may not be enough to promote equity, however – poorer children typically require higher levels of spending per student to compensate for their backgrounds. Another option can be heavily targeted preschool or early childhood education for such children to ensure that they are as well prepared when they reach school as those from better-off households.

A particular way in which public spending can be used to promote equity is to subsidize private payments by poorer households that are required for education. As the next section VI shows, private payments are an increasing burden on the poor, as most countries have largely compensated for declining public spending by an increased reliance on public spending.

22 VI. ENSURING EQUITY IN PRIVATE SPENDING ON EDUCATION

As Table 1 showed, private spending has to some extent filled the gap in several countries created by major declines in public spending. In Georgia, private spending now exceeds public spending in the overall financing of education.

Even where private spending may not represent a high or internationally unusual share of total spending, as in Armenia, it represents an increasing burden on households, especially on poorer households. Education now represents a significant proportion of household spending in all countries except Moldova, and especially in Armenia and the Kyrgyz Republic (Table 10). These data also exclude the major contributions in kind and labor made by parents in all the countries – it is now very often the norm in all the countries that parents are responsible for building maintenance by themselves carrying out repairs, painting classrooms and the like.

Table 10: Education as a Share of Monthly Household Spending, most recent year Year All Poorest 2nd 3rd 4th Richest Households Quintile Quintile Quintile Quintile Quintile Armenia 1998/99 5.2 7.2 6.1 5.3 4.5 3.7 Azerbaijan 2001 1.3 2.4 2.5 2.7 2.9 3.5 Georgia 2000 1.6 1.4 1.3 1.1 1.7 2.2 Kyrgyz 1998 4.1 3.7 3.9 4.1 4.2 4.4 Rep Moldova 2000 0.2 0 0.1 0.1 0.1 0.4 Tajikistan 1999 2.4 2.0 1.9 2.2 2.4 3.0

Some private spending on education is because parents are enrolling their children in private schools. This is particularly the case at pre-school. In two countries, also, private enrollments have become significant in higher education: 40 percent of higher education enrollments in Armenia are in private institutions as are 30 percent in Georgia.

In general, however, private payments, both informal and formal, are being made to enable enrollment at public institutions, and to complement instruction at public schools with private tutoring. In Armenia in 2001, for instance, 63 percent of enrollments in public universities were paid. In Georgia, fees have also been introduced in Grades 10 and 11 of general education. In Georgia, some 10 percent of private spending on education is for private tutoring; in Moldova, the number is unknown but the phenomenon is widespread. In Tajikistan also, informal payments to teachers at all levels are very common. Moreover, at least in higher , the situation is now such that it is said that university admission and degrees can allegedly be bought for private payments and without reference to academic achievement. The proportion of primary school parents making payments in the Kyrgyz Republic rose from 15 percent in 1993 to 95 percent in 1997. In Azerbaijan, 47 percent of new students in public Higher Education Institutions are in paid places and extrabudgetary contributions account for 59 percent of total higher education spending in public institutions. In Moldova, they account for 68 percent.

As shown in Table 2, the private cost of education has become a significant reason for non-enrollment and non-attendance in countries for which such data exist: Armenia, Azerbaijan

23 and the Kyrgyz Republic. Anecdotal and qualitative evidence suggests that this is also a factor in the other four CIS-7 countries.

Continued heavy reliance on private spending is probably inevitable for at least the next decade in most countries, until public spending levels can be raised as a share of GDP and hence public education spending can rise significantly as a share of GDP. So long as private payments exist, it will be important to make provision for those who cannot afford to pay. This can be achieved by targeting public spending toward the poorer segments of society and by substituting community contributions for payments by individual households, at least in basic education. In addition, throughout the education systems, it is important that the various informal payments that are now pervasive be made transparent and be regularized, again with a particular emphasis on equity.

24 VII. SUMMARY

CIS-7 countries face a hidden crisis in education. Country circumstances do differ, but it is remarkable to what extent all seven have followed similar paths in the last decade. Reacting to sharply reduced public spending, largely the result of GDP declines rather than a reduced sectoral share for education, they have responded in three ways:

· Decentralizing financing to the rayon level; · Attempting to increase resource availabilities through revenue generation and requiring private payments, both formal and informal; and · Cutting expenditures, generally across the board rather than strategically, and particularly by cutting teacher salaries, deferring building maintenance and not providing textbooks and other learning materials.

These actions have been driven by two conscious or unconscious beliefs that surface frequently in discussions with education policymakers. The first is that it will one day be possible to restore the education system enjoyed during the Soviet era and that the problems currently faced are somehow temporary. The second, somewhat contradictory, pervasive belief is that private expenditure can make up for lost public expenditure.

The result of these actions has, however, been to create educational systems characterized by declining enrollments in general education, reduced quality, growing corruption and increased inequity and elitism. Private payment requirements mean that the poor are increasingly shut out of education, especially higher education but also the upper secondary grades. In both Tajikistan and Uzbekistan, moreover, the problem of low enrollment is manifesting itself much earlier in the educational cycle. In Tajikistan, moreover, a gender issue is emerging toward the end of basic education. Quality, as measured by the availability of inputs and by teacher motivation, has declined in all countries. The use of informal payments has begun to create situations in which grades and admissions can be bought rather than earned. The lack of schemes to assist those from poor families to enroll in fee-paying institutions means that the upper levels of education are becoming increasingly elitist, even while their enrollments are rising.

Visibly lacking in most countries have been coherent overall strategies to address the reduced resource availabilities that the CIS-7 countries now face, and will continue to face even if all should enjoy economic growth in the future. Per capita incomes in these countries are not going to rise again to the level of the Soviet period, with the possible exception of oil-rich Azerbaijan. This means that public resources must be spent efficiently and strategically which in turn means:

(a) Reconsidering plans for major expansions, such as to 12 years of general education in some countries, until sufficient resources are available. More important is probably to change the nature of education to focus on critical thinking skills. (b) Eliminating arrears in public spending on education, so that future spending can be on a sustainable basis. (c) Trying to raise public spending on education at least to 4 percent of GDP through increased overall public spending and increased sectoral

25 allocations, although this will take considerable time and will not be possible in all countries. (d) Maximizing efficiency in public spending by i. Focusing public resources on general education, especially in Armenia, Moldova and Uzbekistan. ii. Reducing spending on vocational education where this is excessive iii. Ensuring that educational quality is met by ensuring adequate funding of non-salary inputs to education, especially teaching materials. iv. Decreasing unit costs in all levels of education by: 1. Increasing student-teacher ratios in all countries, reducing teacher numbers and paying teachers more. Different strategies will be appropriate according to whether the number of school age children is increasing, constant or decreasing in the country. 2. Increasing teacher:nonteacher ratios by reducing nonteaching staff. 3. Increasing energy efficiency in educational buildings, especially in Moldova, Kyrgystan and Tajikistan. 4. Introducing multigrade teaching in small remote schools that cannot realistically be consolidated. (e) Ensuring equity in public spending by biasing it toward the poor, including targeted schemes to subsidize private educational expenditures that deter enrollment. (f) If private payments are to be made in general education, they should as far as possible take the form of community contributions rather than individual parental payments. (g) Relying largely on private resources for higher education, but ensuring equity of access through using public resources for scholarship and loan schemes for those accepted on merit who are unable to afford to attend. (h) Developing outcome measures of learning, both through introducing national assessment schemes and through participation in the international comparative learning assessments.

The measures with the greatest efficiency gains, in terms of both reduced costs and increased quality, are to protect non-salary expenditures on inputs, to pay teachers better to motivate them, to increase student:teacher ratios, and to increase teacher:nonteacher ratios. These apply to all countries. Reform in these areas is not straightforward, however, and requires complementary reforms – the rigid system of norms must be changed, for instance, if teacher numbers are to be reduced. It is also politically very difficult as employment in the public sector may have to be reduced at the same time unemployment is widespread throughout the economy. Countries with growing populations and higher existing student:teacher ratios will find it easier than others.

CIS-7 countries have begun to move in these directions but the pace of change could be accelerated. In Georgia, for instance, the student:teacher ratio has been raised in general education from 8.3 in 1991 to 10.4 today. This impressive 25 percent

26 improvement is still a long way from possible goals of 18, the OECD norm, or 25, a reasonable ratio for good learning outcomes as PISA has shown.

27 BIBLIOGRAPHY

Berryman, Sue; Vahram Avanessian, Levon Barkhudaryan; Zhora Asatryan; Gayane Avanesyan and William M. Tracy. 2002. The Armenia Education System: Public Expenditure Review. World Bank. Mimeo.

Burnett, Nicholas; and Moukim Temourov. 2002. Meeting the Education Challenge: Policy Options for the Next Generation: Tajikistan Education Sector Review. World Bank. Mimeo.

Dundar, Halil. 2002. Azerbaijan: Education Sector Development Project – Back to Office Report for Identification Mission. World Bank. Mimeo. March 19, 2002.

Howse, Geoff; and Imran Abdullayev. 2002. Azerbaijan Education Cost and Financing Study (World Bank Credit 3220-AZ). Mimeo.

OECD. 2001. Education at a Glance – OECD Indicators.

Perkins, Gillian; and Ruslan Yemtsov. 2001. Armenia: Restructuring to Sustain Universal General Education. World Bank Technical Paper No. 498.

Rysalieva, Symbat Dj.; and Gulmira A. Ibraeva. 1999. Educational Financing and Budgeting in Kyrgyzstan. UNESCO: IIEP.

Tibi, Claude; Sue E. Berryman, and Michael Peleah. 2002. Moldova’s Education Sector: A Financing Strategy to Leverage System-Wide Improvement. World Bank. Mimeo

UNICEF. 2001. A Decade of Transition (The MONEE Project: CEE/CIS/Baltics).

World Bank. 2000. Kyrgyz Republic: Fiscal Sustainability Study.

World Bank. 2001. Kyrgyz Republic: Poverty in the 1990s.

World Bank. 2001. Kyrgyz Republic Review of Social Expenditures.

World Bank. 2002. Azerbaijan Republic Poverty Assessment. Mimeo.

World Bank. 2002. Georgia Public Expenditure Review. Mimeo.

World Bank. 2002. Hidden Challenges to Education Systems in Transition Economies.

Ziyaev, Muzufar K.; Ahadjon Rakhamonov and Murtazo S. Sultanov. 2000. Educational Financing and Budgeting in Uzbekistan. UNESCO:IIEP.

Uzbekistan: Education and Living Standards. World Bank. Mimeo.

28 APPENDIX 1 – SOURCES AND NOTES FOR TABLES AND FIGURES

Table 1 Sources and Notes: GDP levels: WDI&GDF database, 2002 Number of students: TransMONEE, 2001 OECD, Education at a Glance, 2001 Armenia, Kyrgyz Rep., 1998: public education expenditures: TransMONEE, 2001; private unit cost is computed from the survey data Georgia: public and private education spending: PER 2002. The private expenditures are for the period Jan.-Sept. 2002 Tajikistan: N.Burnett and M.Temourov, 2002

Table 2, 10 Source: Own computations from the most recent household surveys

Table 3 Sources: Armenia: 1991-96:G.Perkins, R.Yemtsov, 2001;1997-01:S.Berryman, 2002 Azerbaijan: 1991-97: TransMONEE, 2001; 1998-01: PA, 2002 Georgia: 1991-95: PER, 1996; 1996-01: PER, 2002 Kyrgyz Rep.: TransMONEE, 2001 Moldova: 1991-93: GDF&WDI, 2002; 1994-00: C.Tibi, S.Berryman, D.Peleah, 2002 Tajikistan: N.Burnett and M. Temourov, 2002 Uzbekistan: 1991: GDF&WDI, 2002; 1992-00: M.Mertaugh, 2002

Table 4 Sources: Armenia: 1992-1996: Staff Appraisal Report, 1997; 1997-2000: C.Tibi, S.Berryman, D.Peleah, 2002 Azerbaijan: 1992-1994: Poverty Assessment, 1997; 1995-2001: Poverty Assessment, 2002 Georgia: 1992-95: Education System Realignment and Strenghtening Program Project, 2001; 1996-01: PER, 2002 Kyrgyz Rep.: "Kyrgyz Republic - Review of Social Policy and Expenditures", 2001 Moldova: S.Berryman, 2002 Tajikistan: N.Burnett and M. Temourov, 2002 Uzbekistan: R. Nayar, 2002 Notes: Armenia: data on 1992-1995 refer to school years 1991/1992…also, the figure for 1995 is percentage of the planned budget, and for 2001 - % of the preliminary budget Azerbaijan: 1995: 14.3 in PA Uzbekistan: 1993:17.4 and 1996: 18.6 from "PER - Uzbekistan - Social and Structural Review"

Table 5 Sources: Armenia: S.Berryman, 2002; Azerbaijan: PA, 2002; Georgia: PER, 2002; Kyrgyz Rep.: RSPE, 2001; Tajikistan: 1997-99: R.Purcell, 2000; 2000-01: N.Burnett and M. Temourov, 2002

Table 6 Sources: Armenia: S.Berryman, 2002; Kyrgyz Rep.: RSPE, 2001; Moldova: C.Tibi, S.Berryman, D.Peleah, 2002; Tajikistan: N.Burnett and M.Temourov, 2002; Uzbekistan: R.Nayar, 2002 Country Notes: Armenia: the 2002 figures are unadjusted; the unit cost is relative to the general education Moldova: boarding schools are secondary boarding, do not include boarding schools for handicapped upper secondary VET: polyvalent schools Moldova: figures represent the public unit cost, not the total one; the unit cost is relative to the general secondary schools Kyrgyz Rep., Tajikistan, Uzbekistan: university level figures are the ones for higher education

Table 7 Source: TransMONEE, 2001

Table 8 Sources: Armenia: S.Berryman, 2002; Azerbaijan: PA, 2002; Georgia: PER, 2002; Kyrgyz Rep.: RSPE, 2001; Tajikistan: N.Burnett and M.Temourov, 2002

Table 9 Sources: Armenia: S.Berryman, 2002; Azerbaijan: PA, 2002; Tajikistan: N.Burnett and M.Temourov, 2002

29 Figure 1 Source : TransMONEE 2001

Figure 2, 4 Source: TransMONEE, 2001

Figure 3 Source: Own computations from the most recent household surveys

Figure 5 Sources: Azerbaijan: PA, 2002 ; Georgia: PER, 2002; Kyrgyz Rep.: RSPE, 2001; Moldova: C.Tibi, S.Berryman, D.Peleah, 2002; Uzbekistan: M.Mertaugh, 2002 Tajikistan: 1997-99: R.Purcell, 2000; 2000-01: N.Burnett and M. Temourov, 2002

Figure 6 Sources: Armenia: 1995/96: Staff Appraisal Report, 1997; 1997-2002: C.Tibi, S.Berryman, D.Peleah, 2002; Azerbaijan: PA, 2002; Georgia: PER, 2002; Kyrgyz Rep.: RSPE, 2001; Moldova: S.Berryman, 2002; Uzbekistan: M. Mertaugh, 2002 Tajikistan: till 1999: Tajik social spending spreadsheet; 2000-01: N.Burnett and M.Temourov, 2002 Country Armenia (1997-2002): pre-primary: local budgets for and local share of extracurricular schools; basic: includes primary, Notes: lower secondary and upper secondary academic; tertiary: includes colleges and universities; other: boarding schools for general education Armenia (1996-1996): basic: general education; vocational/technical: professional and technikums; tertiary: higher education Azerbaijan: basic: w/o evening and part-time institutions; vocational/technical: technical, lyceums and vocational schools, special VET and lyceums, secondary education institutions; tertiary: higher education; other: boarding schools and special regime boarding schools, orphanages; re-training institutions: training and qualification upgrading, and other institutions for training Georgia: basic: elementary and major education stage, primary and secondary schools; vocational/technical: vocational, technikums and colleges; tertiary: higher education; other: childcare houses, special houses, special regime boarding schools for disabled Kyrgyz Rep.: basic: primary and secondary together; vocational/technical: VET and specialized secondary Moldova: basic: primary and secondary general; vocational/technical: Polyvalent/professional schools; tertiary: colleges, universities and others; does not include the spending on schools attached to other ministries than MEYS; other: secondary boarding and boarding for handicapped Tajikistan: pre-primary: , vocational/technical: till 1999: professional-technical colleges, 2000-01: upper secondary (overestimated); other: internats & special schools, secondary special educational institutions, orphanages, evening schools, after-school work with children Uzbekistan: basic: general schools; tertiary: higher education; other: all the others

Figure 7, 9, 10 Sources: Armenia , Azerbaijan: own computations from level data; Georgia: PER, 2002; Kyrgyz Rep.: RSPE, 2001; Moldova: S. Berryman, Tajikistan:2002 till 2000: Tajik social spending spreadsheet; 2001: N.Burnett and M.Temourov, 2002; Uzbekistan: D. Isamiddinova (resident mission)

Figure 8 Armenia: S.Berryman, 2002; Azerbaijan:1992-97: PA, 2002; 2000-01: A.Kuddo, 2002; Kyrgyz Rep., Uzekistan: Essp; Tajikistan: Sources: N.Burnett and M. Temourov, 2002 Country Armenia, Kyrgyz Rep. and Uzekistan: teacher's salaries Notes: Armenia: the corresponding figures for the education sector are 89/89/83 Azerbaijan: 2002: preliminary data, average for Jan.-Dec. 2000-01 are figures for the education sector

30