Higher education institutions in Ukraine used to get public funding through an historic principle. Incremental budgeting changes for universities were contingent solely on the year-to-year variation in state-subsidised student numbers. The permissible student-faculty ratio per field of education, level and mode of study governed institutional staffing arrangements in line with respective state regulation.

This regulatory framework has long been blamed for irrational institutional behaviour and preventing universities from exercising autonomy over their staffing. For one thing, the financial incentives prompted universities to keep the student body growing regardless of their capacity or students’ academic performance.

According to the 2019 U-Multirank country note, Ukrainian universities are placed well above average when compared to their peers on student graduation rates. While low drop-out rates could be a consequence of student-centred strategies, they are more likely to result from the retention-orientated public funding mechanism.

The top-down policy with regard to academic recruitment has also had a negative impact. The obligation to have university appointments confirmed by the Ministry of Education and Science of Ukraine brought about a deterioration in institutional managerial efficiency.

The need to switch from maintaining the country’s extensive university network to rewarding quality education providers has brought a discussion about the introduction of performance-based funding to Ukrainian higher education policy.