International Higher Education, Winter 2003

Funding and Regulating Lithuanian Higher Education

Liudvika Leisyte
Liudvika Leisyte is a recent graduate of the master's program in International and Comparative Education, Institute for Educational Research, Oslo University.

Lithuania's higher education system is in a state of constant flux, facing major challenges of expansion, diversification of funding, and changing regulations. The transition from a centrally planned economy to a market-led one has caused Lithuania to restructure the social sector, including higher education. The practice of higher education governance through state control engrained during the Soviet period has been shifting to one of state supervision. Tendencies toward deregulation have been apparent in the policy debates on higher education, starting with the law on science and higher education (1991), the Constitution of the Republic of Lithuania (1992), and the law on higher education (2000).

As in most Central and Eastern European countries, both public and private higher education institutions in Lithuania expanded--going from 12 in 1990 to 35 in 2002. A number of former technicums and vocational schools opted to participate in a competition to become fully fledged higher education institutions granting bachelor's degrees. Individuals or religious organizations created 13 new private higher education institutions. The Ministry of Education and Science tightly controlled their establishment though licensing and quality assurance, which slowed the process of expanding private-sector higher education, when compared to that of other countries in the region.

As a result, a binary higher education system was established. In the same period, student numbers increased from 59, 000 in 1996–1997 to 96, 000 in 2000–2001. However, public funding has been decreasing quite dramatically at the same time as demands for efficiency and quality have been growing. Subsequently, regulation and funding of the expanding higher education sector have become key topics in the current policy debate in Lithuania. How does the decreasing funding challenge the higher education sector in Lithuania, and is this drop in funds an opportunity for higher education to become more efficient?

Major Transformations in Funding
After 1999 funding started to decrease from U.S.$148,700 in 1999 to U.S.$129,500 in 2000. Higher education institutions have faced serious difficulties in financing wages, heating, electricity, and building maintenance. Moreover, they have had to tackle the state bureaucracy's complicated system of accountability and control. This led many institutions facing financial crisis to search for alternative sources of funding. The most immediate target to obtain extra funding was the students. Tuition and fees were introduced, although these were not covered by the 1991 law on science and higher education. This lack of regulation allowed for a huge discrepancy in student fees among different institutions. Students, parents, and lobbyist groups started intense public debates on the accessibility and the efficiency of higher education under the new conditions.

The Lithuanian government brought up the question of tuition payment by students. The 2000 law on higher education and other by-laws have introduced more output-based funding formulas, and they have regulated student fees contracts between the Ministry of Science and Education and higher education institutions by subject. It is interesting to speculate whether these tighter regulations will allow for wider participation, keeping in mind that as of October 1, 2000, nearly one-third of the total student population in public higher education establishments was self-financed. Moreover, the increased student fees did not offset the increasing costs and the decreasing state funding. This situation has forced higher education institutions to establish contracts with businesses, industry, and communities. For instance, Kaunas University of Technology is a pioneer in this respect, receiving nearly 27 percent of its income from the nonpublic sector. Their partners are local enterprises, firms, and institutions for research, design, and small-scale manufacturing.

Changes in Higher Education Regulation
Thus, other stakeholders are becoming more important in the regulation of higher education in Lithuania. Lobbyists for the so-called academic oligarchy--by which I mean the group of academics influencing decision making on the national level--increased their impact through participation in buffer organizations, such as the the Science Council of Lithuania, the Lithuanian Academy of Sciences, and the Conferences of Universities, Colleges and Research Institutes' Rectors. Student participation in governance has been growing through student unions and nongovernmental youth organizations. For example, after passing the by-law on the new funding mechanism, a number of conferences were organized by academic lobbyists to attract attention to the critical situation in higher education funding.

Academic associations have expressed discontent with inconsistencies in funding policy. A new formula of resource allocation intimidates institutions with new efficiency demands. Moreover, some members of the above-mentioned academic oligarchy fear that the 2000 law on long-term funding of science and education, with its 2001 by-law on the new order of accountability, might discourage institutions from becoming more efficient. The latter regulation requires higher education institutions to transfer their independently generated income to the state budget for auditing and subsequently for earmarking. The Ministry of Finance still has an important say in the higher education funding process in Lithuania, since it is involved in the resource distribution mechanism of both public and nonpublic income of public higher education institutions.

Future Prospects
As seen from the above examples, the contradiction between policy discourse and the existing bureaucracy in state institutions still hinders the implementation of higher education reform. Though the state agreed on lump-sum allocations to higher education institutions in the 1991 law on science and higher education, the accountability remained strict and the real funding mechanism has not changed. However, one must admit that, until recently, higher education has not been a top priority of the state. Thus, it might take time to develop and implement a homogeneous strategy and coherent policies, implementation, evaluation, and follow-up monitoring. The changing role of different stakeholders and the more aggressive participation of higher education institutions in the policymaking process might be a new impetus for further developments in the sector.