Studies at the level of higher education are funded from the budget of the Ministry of Education and Research within the scope of the state-commissioned education. The funding system of state-commissioned study places consists of two main components: the total cost of a student place is calculated by multiplying the base cost of the student place1 by the coefficient established for a field of study (or a curriculum as an exception). In 2008, the base cost of a state-commissioned student place was 26,000 EEK in the case of bachelor’s programmes and 39,000 EEK in the case of master’s programmes, indicating 30% increased compared to 2007.
The base cost cut planned for 2009 due to the economic downturn amounts to 7% in total, resulting in the reduction of average base costs to 24,180 EEK in the case of bachelors programmes and 36,270 EEK in the case of masters programmes.
The average base cost of a student place in doctoral programmes was 500,000 EEK for the entire period of study. As of 2009, a new model of funding has been implemented with regard to doctoral programmes, according to which a university is provided with 148,800 EEK per year for each state-commissioned doctoral student place it offers until 31 December 2009. Of this amount, 76,800 EEK is intended for the compensation of the university’s expenses and 72,000 EEK is paid out as a doctoral allowance (monthly payments of 6000 EEK).
In addition to covering the base cost of the doctoral study, the Ministry will also provide result-based funding for doctoral student places in the amount of 192,000 EEK.
The expenditure on state-commissioned education has grown each year, reaching the level of 1.2 billion EEK in 2007. In connection with the significant increase in the base cost of a student place, the expenditure on state-commissioned education exceeded 1.5 billion EEK in 2008.
The total expenditure on public higher education in 2008 amounted to 2.6 billion EEK (see figure). In addition to state-commissioned education, this amount also includes the expenses related to investments in higher education institutions, expenses associated with study allowances and study loans, expenses related to institutions of higher education funded by other ministries (Estonian Public Service Academy and the Estonian National Defence College), and other project-based expenses. A substantial increase in public expenditure related to higher education occurred in 2007 when the expenses increased by a total of 45%, reaching 2.5 billion EEK. The increase consisted primarily of investments and expenses covered by foreign aid. In the case of 2008 expenditures, the decrease in investments was compensated by the significant increase in the base cost of state-commissioned education.
The division of public expenditure on higher education by type of school and source of funding (billions of EEK); changes by year.
Of all school types, public universities receive the biggest share of funding – in 2008, funding for public universities comprised 67% of all public higher education expenditures. Approximately 66% of all students in state-commissioned student places were studying in public universities in the same year. Expenditures related to professional higher education made up 22% of the public sector spending on higher education in 2008. Over time, other expenditures on higher education, which primarily consist of the expenses associated with study loans in the budget of the Ministry of Finance, have constituted approximately one-tenth (10% in 2008) of public higher education costs.
According to the goal set forth in the Estonian Higher Education Strategy, state-commissioned student places were to be created by 2008 for an estimated minimum of 50% of persons who graduate from institutions of secondary education and 10% of persons who graduate from institutions of secondary vocational education. The number of student places commissioned by the state for 2009 is based on the need for student places resulting from the level of unemployment and the opportunity to contribute public resources to further training.
As a rule, a university must create at least 1.5 state-commissioned places for bachelor’s level students per every state-commissioned place for master’s level students. Three-year performance contracts funded from the state budget will be introduced in 2009, which will take into account the results and quality of study programmes, the number of graduates and the needs of the Estonian labour market.
Taking into account the growing need for people with doctoral level degrees outside the academia, the number of state-commissioned doctoral study places will be gradually increased. The goal is to reach the average doctoral thesis defence efficiency in the EU and have at least 300 doctoral theses defended in Estonia every year. Graduate schools were launched in 2006 with the support of the European Social Fund (for more information on this subject, see the chapter Research).