This is a report written by Anto Bajo and Ivana Jakir-Bajo from the Institute of Public Finance. The paper quotes the preliminary results of a scientific research project launched by the Institute in 2003, which is still underway. The existing system for financing higher education and science in Croatia is holding up development and developmental processes. In spite of a high level of financial resources available for the financing of tertiary level institutions and public institutes, there is a series of problems the solution of which would help in the construction of a transparent system of public services, open to both users and the public. In spite of the objectives announced, as cooperation with the private sector and foreign scientific institutions, tertiary level and public institutes are still very content to be financed from the national Budget while enjoying total autonomy in the way they use their own revenues earned on the market.