Legislative Framework

It was noted that the overall pattern of HE reforms initiated in the early 1990s in Hungary, with its overstated emphasis on academic and institutional autonomy, bears close parallel to these in other Central European countries. As expected, HE systems of all newly liberated nations with a shared legacy of extreme dependence on the state authority faced problems and questions of a comparable nature the most important and contentious of which was redefinition of the state role in the provision and governance of the sector. Yet, significant differences in the nature and pace of the restructuring process became traceable soon after the regime changes of 1989.

One of the notable distinguishing factors of the Hungarian developments is related to the role played by the World Bank (WB) in HE restructuring. The WB’s readiness to financially assist in enhancing human capital and putting the HE system upon a more efficient and firmer footing turned out to be of greatest importance for the future of Hungarian HE transformation, caught in between the “catching up with Europe”

rhetoric and the economic reality. Owing to the Bank’s relatively long-term involvement in the Hungarian economy‘s reconstruction and the latter’s solid

reputation as a reliable re-payer of loans, Hungary had been selected to launch a qualitatively different project of supporting restructuring of the HE sector as an integral aspect of the Bank’s aid to a broader economic transformation in emerging democracies. As the grounds for the project aimed at improving human capital was laid down as early as 1988, the Human Recourse Development Program Loan Agreement for 150 million USD could already be put into operation in 1991 (Szep 1998).

Based on an extensive fieldwork of the Bank’s experts in Hungary, its chief policy recommendations were directed at such concerns as expanding the access to HE, enhancing the efficiency of the system and increasing its responsiveness to the shifting social and economic needs. Funding mechanism restructuring by means of unification of financial system and introduction of a normative funding model in turn was perceived as the key to achieving proposed objectives. Moreover, the Bank was in favor of the diversification of institutional funding through introducing partial tuition fees, private donation or some other sources of revenue. Finally, development of what was termed as “universitas” – that is, comprehensive, multi-disciplinary institution of higher learning – to achieve some reasonable economies of scale and thus alleviate inefficiencies associated with extremely fragmented institutional structure was also recommended from the outset.

It should also be added here that often it has proven difficult to tell apart recommendations offered by the Bank experts from what had already been conceived by Hungarian policy makers. According to what has emerged from interviews undertaken with the key actors, as well as from conducted studies, increasing

responsiveness of the HE system by means of the institutional expansion was an overriding concern of the Hungarian government (Szep 1998). There was also a general consensus about an extreme inefficiency of the system and the urgency of its restructuring for which institutional integration was perceived as an important tool.

Having agreed on those, the primary advice of the World Bank turned on mobilizing non-state resources by diversifying the financial base of public institutions on the one hand and encouraging private sector development on the other, as well as introducing a more equitable system of HE finance.²⁸

Although overall performance of the scheme cannot be judged as overly successful, many policy pronouncements supported both by the Bank experts and Hungarian policymakers found its expression in the first law on HE passed in 1993.²⁹ By means of its provision, the new Law on Higher Education was to ensure “freedom of teaching, freedom of study, and freedom to cultivate arts and science alike”

(preamble). Far from supposing unambiguous fulfillment of the objective of free university now entrenched in the legislation, shift in the way HE sector is steered has nevertheless been considerable. One such change concerned reinstating the authority of the Ministry of Education and Culture over all but two (the National University of Defense and the Police College) institutions of HE. Moreover, the Law established a regulatory framework for a new funding mechanism largely based on formula-driven allocation mechanism.

28According to the most critical view, Hungary was politically too insignificant a country for the Bank to be interested in pondering policy alternatives. Instead, the underlying motivation behind its involvement has been selling a loan and experimenting what could be later replicated in larger and geo-politically more important countries (Szep 1998).

29 Before 1993, the higher education sector operated under the regulation of the Education Law of 1990.

Some of other recommendations were dealt with a number of regulatory acts that followed shortly before eventually signing the second WB loan agreement in 1998.

For example, the Resolution of Hungarian Parliament, passed in 1995 was aimed at clarification of HE policy goals. Important among the objectives of the new governmental reform program laid down in this Parliamentary Resolution was to expand the rate of enrollments, to create flexible system permitting transferability between different levels of HE and to standardize the qualification requirements system. Another set of goals was directed at assuring “sector neutrality” so that the quality rather than public or private ownership formed the basis for the public budget allocations and achieving greater efficiency by granting more economic independence to institutions on the one hand and by mobilizing non-state recourses, including tuition and other sources, on the other.

The 1995 Resolution was followed by the 1996 Amendment to the Higher Education Law which provided much patent legal framework with respect to institutional and financial autonomy, and very importantly, concerning institutional integration procedure that was largely missing from the previous law. It thus elucidated the conditions for successful association of institutions and set the deadlines and criteria for institutions to carry out their own merging on voluntary basis.³⁰ The 1996 Amendment also prepared the ground for the integration of post-secondary training into the HE system. Thus, a four-tier structure of HE was introduced as the result of the incorporating of a two-year vocational education in the system.³¹ Taken as a

30 Act LII on Restructuring the Institutions of Higher Education passed in 1999 provided additional guidelines for further acceleration of institutional integration process (the Ministry of Education 2002).

31 Because of the low per-unit cost on which those institutions operate, encouraging the growth of short-cycle training programmes could have been an effective way for expanding an access while containing costs, but exceedingly low level of student interest indicates that the integration of vocational training has not been successful. It has been suggested that institutional interests and

whole, the strategic foresight of the new government with respect to HE as well as to the general economic problems the country encountered was much better defined and more clearly articulated.

The second agreement of the WB loan was signed in 1998. In various respects, the policy objectives proposed by the Bank remained almost unchanged, although somewhat more weight was given to the integration of single-purpose institutions into multi-faculty ones. Despite the fact that the circumstances leading to the second reform project, in contrast to the first, was ripe for change, the loan was canceled altogether in 2002 by the Fidesz led government.

Finally, another important event in policy-making process was marked by Hungary’s signing the Bologna declaration in 1999 but hardly any steps towards the fulfillment of its principles were taken in the forthcoming years. Only in 2002, the newly elected government started implementing its requirements, such as moving towards a unitary linear system with clear distinction among B.A., M.A. and PhD levels and introducing cumulative credit system. But it was not until passing the new law on HE in 2005 that these requirements became binding for all HE institutions.