Background and necessity to reorganize communal educational institutions from public institutions into public enterprises with the right of commercial activities

Currently, on the territory of East Kazakhstan region, there are colleges with form of incorporation in the form of a communal public institution subordinate to Education Administration of East Kazakhstan region. In order to increase competition in the education system, improving the efficiency of resources development in this system, its responsiveness to the population's need to receive educational services, as well as, first of all, in view of college functioning on the basis of financing from its own funds from its own activities, Education Administration of East Kazakhstan region considers it necessary to create colleges in form of incorporation of communal public enterprises on the basis of the right of commercial activities, which will be created on the basis of existing colleges, which are currently functioning in the form of a communal public institution.

The following factors determine the grounds and necessity of creating communal public enterprises on the basis of the right of commercial activities, by their transformation from communal public institutions.

1. In accordance with the norms of the Civil Code of the Republic of Kazakhstan, a public institution is a non-profit organization - i.e. it does not have a commercial goal and does not distribute the received income between the participants (Article 34 of the Civil Code of the Republic of Kazakhstan), which is created by the state, in accordance with the legislation and is entirely funded only by the state budget in accordance with the Individual Funding Plan of a public institution, which is developed, formed and approved in accordance with the Rules for Republican and Local Budgets Execution, the registration of financial transactions and events is performed by a public institution in accordance with the Accounting Instructions in public institutions.
2. Unlike a public institution, public enterprises are not funded by the state budget, but receive money as a result of fulfilling obligations under a state order agreement, or from the sale of services of their own production to third parties, i.e. providing paid educational services.
3. By the legislation of the Republic of Kazakhstan, officials of public institutions are classified as civil servants with the salary payment system determined by the Government of the Republic of Kazakhstan, while the salary payment system of civil servants is limited by a strict framework of official salaries and strictly established additional payments, as a result of which a head of an institution does not have the right to increase the amount of salaries of employees, and the planned financing of public institutions with strict spending limits and input normals, as well as the duration of the procedures to make changes in the financing plan, almost completely excludes the use of economic incentive mechanisms for the volume and quality of educational services performed.
4. Reorganization of public educational institutions into public enterprises on the basis of the right of commercial activities will improve the quality of services in the education system, improving the efficiency of resources development in this system and its response to the population's need to receive educational services, since the right of operative management does not fully ensure effective management of educational institutions and does not allow them to introduce new methods of financing, as well as to use measures of economic incentives.

Thus, taking into account the above stated factors and circumstances, it is clear that the way to increase the independence of public educational entities is to reorganize them into public enterprises on the basis of the right of commercial activities.